Correlation Between Short Oil and American Beacon
Can any of the company-specific risk be diversified away by investing in both Short Oil and American 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 Short Oil and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Short Oil Gas and American Beacon Ark, you can compare the effects of market volatilities on Short Oil and American 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 Short Oil with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Oil and American Beacon.
Diversification Opportunities for Short Oil and American Beacon
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Short and American is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Short Oil Gas and American Beacon Ark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Ark and Short Oil 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 Short Oil Gas are associated (or correlated) with American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Ark has no effect on the direction of Short Oil i.e., Short Oil and American Beacon go up and down completely randomly.
Pair Corralation between Short Oil and American Beacon
Assuming the 90 days horizon Short Oil Gas is expected to under-perform the American Beacon. But the mutual fund apears to be less risky and, when comparing its historical volatility, Short Oil Gas is 3.28 times less risky than American Beacon. The mutual fund trades about -0.75 of its potential returns per unit of risk. The American Beacon Ark is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,582 in American Beacon Ark on October 24, 2024 and sell it today you would earn a total of 60.00 from holding American Beacon Ark or generate 3.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Short Oil Gas vs. American Beacon Ark
Performance |
| Timeline |
| Short Oil Gas |
| American Beacon Ark |
Short Oil and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Short Oil and American Beacon
The main advantage of trading using opposite Short Oil and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Oil position performs unexpectedly, American 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 American Beacon will offset losses from the drop in American Beacon's long position.| Short Oil vs. Blackrock Global Longshort | Short Oil vs. Baird Short Term Bond | Short Oil vs. Fidelity Flex Servative | Short Oil vs. Delaware Investments Ultrashort |
| American Beacon vs. Fidelity Government Money | American Beacon vs. Tiaa Cref Life Funds | American Beacon vs. Lord Abbett Emerging | American Beacon vs. Jpmorgan Trust Iv |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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