Correlation Between American Beacon and Amer Beacon
Can any of the company-specific risk be diversified away by investing in both American Beacon and Amer Beacon at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining American Beacon and Amer Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Stephens and Amer Beacon Ark, you can compare the effects of market volatilities on American Beacon and Amer Beacon and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in American Beacon with a short position of Amer Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Amer Beacon.
Diversification Opportunities for American Beacon and Amer Beacon
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Amer is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Stephens and Amer Beacon Ark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amer Beacon Ark and American Beacon is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on American Beacon Stephens are associated (or correlated) with Amer Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amer Beacon Ark has no effect on the direction of American Beacon i.e., American Beacon and Amer Beacon go up and down completely randomly.
Pair Corralation between American Beacon and Amer Beacon
Assuming the 90 days horizon American Beacon is expected to generate 2.22 times less return on investment than Amer Beacon. But when comparing it to its historical volatility, American Beacon Stephens is 2.88 times less risky than Amer Beacon. It trades about 0.52 of its potential returns per unit of risk. Amer Beacon Ark is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 1,256 in Amer Beacon Ark on September 1, 2024 and sell it today you would earn a total of 326.00 from holding Amer Beacon Ark or generate 25.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Stephens vs. Amer Beacon Ark
Performance |
| Timeline |
| American Beacon Stephens |
| Amer Beacon Ark |
American Beacon and Amer Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Amer Beacon
The main advantage of trading using opposite American Beacon and Amer Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Amer Beacon can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Amer Beacon will offset losses from the drop in Amer Beacon's long position.| American Beacon vs. Davis Financial Fund | American Beacon vs. Mesirow Financial Small | American Beacon vs. Gabelli Global Financial | American Beacon vs. Prudential Jennison Financial |
| Amer Beacon vs. Fidelity Managed Retirement | Amer Beacon vs. Jp Morgan Smartretirement | Amer Beacon vs. Calvert Moderate Allocation | Amer Beacon vs. Transamerica Cleartrack Retirement |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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