Correlation Between American Beacon and Virtus Kar
Can any of the company-specific risk be diversified away by investing in both American Beacon and Virtus Kar 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 Virtus Kar 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 Virtus Kar Small Cap, you can compare the effects of market volatilities on American Beacon and Virtus Kar 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 Virtus Kar. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Virtus Kar.
Diversification Opportunities for American Beacon and Virtus Kar
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Virtus is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Stephens and Virtus Kar Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Kar Small 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 Virtus Kar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Kar Small has no effect on the direction of American Beacon i.e., American Beacon and Virtus Kar go up and down completely randomly.
Pair Corralation between American Beacon and Virtus Kar
Assuming the 90 days horizon American Beacon Stephens is expected to under-perform the Virtus Kar. In addition to that, American Beacon is 1.15 times more volatile than Virtus Kar Small Cap. It trades about -0.29 of its total potential returns per unit of risk. Virtus Kar Small Cap is currently generating about -0.27 per unit of volatility. If you would invest 5,841 in Virtus Kar Small Cap on November 27, 2024 and sell it today you would lose (261.00) from holding Virtus Kar Small Cap or give up 4.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Stephens vs. Virtus Kar Small Cap
Performance |
| Timeline |
| American Beacon Stephens |
| Virtus Kar Small |
American Beacon and Virtus Kar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Virtus Kar
The main advantage of trading using opposite American Beacon and Virtus Kar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Virtus Kar 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 Virtus Kar will offset losses from the drop in Virtus Kar's long position.| American Beacon vs. Access Flex High | American Beacon vs. Mesirow Financial High | American Beacon vs. Barings High Yield | American Beacon vs. Prudential High Yield |
| Virtus Kar vs. Virtus Kar Small Cap | Virtus Kar vs. Virtus Kar Mid Cap | Virtus Kar vs. Virtus International Small Cap | Virtus Kar vs. Virtus Kar Small Cap |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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