Correlation Between American Beacon and Easterly Snow
Can any of the company-specific risk be diversified away by investing in both American Beacon and Easterly Snow 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 Easterly Snow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Twentyfour and Easterly Snow Small, you can compare the effects of market volatilities on American Beacon and Easterly Snow 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 Easterly Snow. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Easterly Snow.
Diversification Opportunities for American Beacon and Easterly Snow
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Easterly is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Twentyfour and Easterly Snow Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Easterly Snow 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 Twentyfour are associated (or correlated) with Easterly Snow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Easterly Snow Small has no effect on the direction of American Beacon i.e., American Beacon and Easterly Snow go up and down completely randomly.
Pair Corralation between American Beacon and Easterly Snow
Assuming the 90 days horizon American Beacon Twentyfour is expected to generate 0.09 times more return on investment than Easterly Snow. However, American Beacon Twentyfour is 11.3 times less risky than Easterly Snow. It trades about 0.2 of its potential returns per unit of risk. Easterly Snow Small is currently generating about -0.08 per unit of risk. If you would invest 864.00 in American Beacon Twentyfour on September 15, 2024 and sell it today you would earn a total of 3.00 from holding American Beacon Twentyfour or generate 0.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Twentyfour vs. Easterly Snow Small
Performance |
| Timeline |
| American Beacon Twen |
| Easterly Snow Small |
American Beacon and Easterly Snow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Easterly Snow
The main advantage of trading using opposite American Beacon and Easterly Snow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Easterly Snow 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 Easterly Snow will offset losses from the drop in Easterly Snow's long position.| American Beacon vs. Cutler Equity | American Beacon vs. Ms Global Fixed | American Beacon vs. Us Strategic Equity | American Beacon vs. Balanced Fund Retail |
| Easterly Snow vs. Easterly Snow Longshort | Easterly Snow vs. Calvert Aggressive Allocation | Easterly Snow vs. Vanguard 500 Index | Easterly Snow vs. Putnam Short Duration |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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