Correlation Between American Beacon and Federated High
Can any of the company-specific risk be diversified away by investing in both American Beacon and Federated High 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 Federated High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Sim and Federated High Yield, you can compare the effects of market volatilities on American Beacon and Federated High 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 Federated High. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Federated High.
Diversification Opportunities for American Beacon and Federated High
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Federated is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Sim and Federated High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated High Yield 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 Sim are associated (or correlated) with Federated High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated High Yield has no effect on the direction of American Beacon i.e., American Beacon and Federated High go up and down completely randomly.
Pair Corralation between American Beacon and Federated High
Assuming the 90 days horizon American Beacon is expected to generate 357.0 times less return on investment than Federated High. But when comparing it to its historical volatility, American Beacon Sim is 1.49 times less risky than Federated High. It trades about 0.0 of its potential returns per unit of risk. Federated High Yield is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 638.00 in Federated High Yield on September 1, 2024 and sell it today you would earn a total of 5.00 from holding Federated High Yield or generate 0.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Beacon Sim vs. Federated High Yield
Performance |
| Timeline |
| American Beacon Sim |
| Federated High Yield |
American Beacon and Federated High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Federated High
The main advantage of trading using opposite American Beacon and Federated High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Federated High 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 Federated High will offset losses from the drop in Federated High's long position.| American Beacon vs. Goehring Rozencwajg Resources | American Beacon vs. Hennessy Bp Energy | American Beacon vs. Firsthand Alternative Energy | American Beacon vs. Franklin Natural Resources |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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