Correlation Between American Beacon and American Beacon
Can any of the company-specific risk be diversified away by investing in both American Beacon 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 American Beacon and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Ssi and American Beacon Stephens, you can compare the effects of market volatilities on American Beacon 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 American Beacon with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and American Beacon.
Diversification Opportunities for American Beacon and American Beacon
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and American is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Ssi and American Beacon Stephens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Stephens 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 Ssi 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 Stephens has no effect on the direction of American Beacon i.e., American Beacon and American Beacon go up and down completely randomly.
Pair Corralation between American Beacon and American Beacon
Assuming the 90 days horizon American Beacon is expected to generate 10.57 times less return on investment than American Beacon. But when comparing it to its historical volatility, American Beacon Ssi is 14.01 times less risky than American Beacon. It trades about 0.56 of its potential returns per unit of risk. American Beacon Stephens is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 3,853 in American Beacon Stephens on August 28, 2024 and sell it today you would earn a total of 381.00 from holding American Beacon Stephens or generate 9.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Ssi vs. American Beacon Stephens
Performance |
| Timeline |
| American Beacon Ssi |
| American Beacon Stephens |
American Beacon and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and American Beacon
The main advantage of trading using opposite American Beacon and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon 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.| American Beacon vs. Commonwealth Global Fund | American Beacon vs. Ab Global Risk | American Beacon vs. Dreyfusstandish Global Fixed | American Beacon vs. Ms Global Fixed |
| American Beacon vs. Ridgeworth Innovative Growth | American Beacon vs. Mid Cap Growth | American Beacon vs. Small Pany Growth | American Beacon vs. Morgan Stanley Multi |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |