Correlation Between American Beacon and Dreyfus/the Boston
Can any of the company-specific risk be diversified away by investing in both American Beacon and Dreyfus/the Boston 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 Dreyfus/the Boston 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 Dreyfusthe Boston Pany, you can compare the effects of market volatilities on American Beacon and Dreyfus/the Boston 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 Dreyfus/the Boston. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Dreyfus/the Boston.
Diversification Opportunities for American Beacon and Dreyfus/the Boston
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and Dreyfus/the is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Stephens and Dreyfusthe Boston Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfusthe Boston Pany 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 Dreyfus/the Boston. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfusthe Boston Pany has no effect on the direction of American Beacon i.e., American Beacon and Dreyfus/the Boston go up and down completely randomly.
Pair Corralation between American Beacon and Dreyfus/the Boston
Assuming the 90 days horizon American Beacon Stephens is expected to under-perform the Dreyfus/the Boston. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Beacon Stephens is 1.2 times less risky than Dreyfus/the Boston. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Dreyfusthe Boston Pany is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 4,048 in Dreyfusthe Boston Pany on November 30, 2024 and sell it today you would lose (61.00) from holding Dreyfusthe Boston Pany or give up 1.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Stephens vs. Dreyfusthe Boston Pany
Performance |
| Timeline |
| American Beacon Stephens |
| Dreyfusthe Boston Pany |
American Beacon and Dreyfus/the Boston Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Dreyfus/the Boston
The main advantage of trading using opposite American Beacon and Dreyfus/the Boston positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Dreyfus/the Boston 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 Dreyfus/the Boston will offset losses from the drop in Dreyfus/the Boston's long position.| American Beacon vs. Franklin Federal Limited Term | American Beacon vs. Aqr Sustainable Long Short | American Beacon vs. Doubleline Emerging Markets | American Beacon vs. Goldman Sachs Emerging |
| Dreyfus/the Boston vs. Nuveen Small Cap | Dreyfus/the Boston vs. Dreyfusthe Boston Pany | Dreyfus/the Boston vs. Virtus Kar Small Cap | Dreyfus/the Boston vs. American Beacon Stephens |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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