Correlation Between American Beacon and Ab Select
Can any of the company-specific risk be diversified away by investing in both American Beacon and Ab Select 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 Ab Select 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 Ab Select Longshort, you can compare the effects of market volatilities on American Beacon and Ab Select 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 Ab Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Ab Select.
Diversification Opportunities for American Beacon and Ab Select
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and ASCLX is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Stephens and Ab Select Longshort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Select Longshort 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 Ab Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Select Longshort has no effect on the direction of American Beacon i.e., American Beacon and Ab Select go up and down completely randomly.
Pair Corralation between American Beacon and Ab Select
Assuming the 90 days horizon American Beacon Stephens is expected to generate 2.12 times more return on investment than Ab Select. However, American Beacon is 2.12 times more volatile than Ab Select Longshort. It trades about 0.1 of its potential returns per unit of risk. Ab Select Longshort is currently generating about 0.15 per unit of risk. If you would invest 1,471 in American Beacon Stephens on September 1, 2024 and sell it today you would earn a total of 222.00 from holding American Beacon Stephens or generate 15.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
American Beacon Stephens vs. Ab Select Longshort
Performance |
| Timeline |
| American Beacon Stephens |
| Ab Select Longshort |
American Beacon and Ab Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Ab Select
The main advantage of trading using opposite American Beacon and Ab Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Ab Select 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 Ab Select will offset losses from the drop in Ab Select's long position.| American Beacon vs. American Beacon Ssi | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Twentyfour |
| Ab Select vs. Pace International Emerging | Ab Select vs. Goldman Sachs Emerging | Ab Select vs. Barings Emerging Markets | Ab Select vs. Artisan Emerging Markets |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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