Correlation Between Firsthand Technology and American Beacon
Can any of the company-specific risk be diversified away by investing in both Firsthand Technology 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 Firsthand Technology and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Firsthand Technology Opportunities and American Beacon Shapiro, you can compare the effects of market volatilities on Firsthand Technology 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 Firsthand Technology with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firsthand Technology and American Beacon.
Diversification Opportunities for Firsthand Technology and American Beacon
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Firsthand and American is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Firsthand Technology Opportuni and American Beacon Shapiro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Shapiro and Firsthand Technology 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 Firsthand Technology Opportunities 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 Shapiro has no effect on the direction of Firsthand Technology i.e., Firsthand Technology and American Beacon go up and down completely randomly.
Pair Corralation between Firsthand Technology and American Beacon
Assuming the 90 days horizon Firsthand Technology Opportunities is expected to under-perform the American Beacon. In addition to that, Firsthand Technology is 1.47 times more volatile than American Beacon Shapiro. It trades about -0.01 of its total potential returns per unit of risk. American Beacon Shapiro is currently generating about 0.03 per unit of volatility. If you would invest 1,013 in American Beacon Shapiro on September 12, 2024 and sell it today you would earn a total of 120.00 from holding American Beacon Shapiro or generate 11.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Firsthand Technology Opportuni vs. American Beacon Shapiro
Performance |
| Timeline |
| Firsthand Technology |
| American Beacon Shapiro |
Firsthand Technology and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Firsthand Technology and American Beacon
The main advantage of trading using opposite Firsthand Technology and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Firsthand Technology 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.| Firsthand Technology vs. Berkshire Focus | Firsthand Technology vs. Red Oak Technology | Firsthand Technology vs. Jacob Internet Fund | Firsthand Technology vs. Kinetics Internet Fund |
| American Beacon vs. Towpath Technology | American Beacon vs. Biotechnology Ultrasector Profund | American Beacon vs. Firsthand Technology Opportunities | American Beacon vs. Vanguard Information Technology |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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