Correlation Between Sarofim Equity and American Beacon
Can any of the company-specific risk be diversified away by investing in both Sarofim Equity 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 Sarofim Equity and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sarofim Equity and American Beacon Intl, you can compare the effects of market volatilities on Sarofim Equity 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 Sarofim Equity with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sarofim Equity and American Beacon.
Diversification Opportunities for Sarofim Equity and American Beacon
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sarofim and American is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sarofim Equity and American Beacon Intl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Intl and Sarofim Equity 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 Sarofim Equity 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 Intl has no effect on the direction of Sarofim Equity i.e., Sarofim Equity and American Beacon go up and down completely randomly.
Pair Corralation between Sarofim Equity and American Beacon
Assuming the 90 days horizon Sarofim Equity is expected to generate 0.88 times more return on investment than American Beacon. However, Sarofim Equity is 1.14 times less risky than American Beacon. It trades about 0.08 of its potential returns per unit of risk. American Beacon Intl is currently generating about -0.02 per unit of risk. If you would invest 1,591 in Sarofim Equity on September 3, 2024 and sell it today you would earn a total of 127.00 from holding Sarofim Equity or generate 7.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sarofim Equity vs. American Beacon Intl
Performance |
| Timeline |
| Sarofim Equity |
| American Beacon Intl |
Sarofim Equity and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sarofim Equity and American Beacon
The main advantage of trading using opposite Sarofim Equity and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sarofim Equity 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.| Sarofim Equity vs. Ultra Short Fixed Income | Sarofim Equity vs. Ab Select Equity | Sarofim Equity vs. Gmo Global Equity | Sarofim Equity vs. Rbc Global Equity |
| American Beacon vs. The Hartford Equity | American Beacon vs. Ms Global Fixed | American Beacon vs. The Fixed Income | American Beacon vs. Sarofim Equity |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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