Correlation Between Sprott Uranium and American Beacon
Can any of the company-specific risk be diversified away by investing in both Sprott Uranium 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 Sprott Uranium and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprott Uranium Miners and American Beacon Select, you can compare the effects of market volatilities on Sprott Uranium 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 Sprott Uranium with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Uranium and American Beacon.
Diversification Opportunities for Sprott Uranium and American Beacon
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sprott and American is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Uranium Miners and American Beacon Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Select and Sprott Uranium 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 Sprott Uranium Miners 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 Select has no effect on the direction of Sprott Uranium i.e., Sprott Uranium and American Beacon go up and down completely randomly.
Pair Corralation between Sprott Uranium and American Beacon
Given the investment horizon of 90 days Sprott Uranium Miners is expected to generate 1.83 times more return on investment than American Beacon. However, Sprott Uranium is 1.83 times more volatile than American Beacon Select. It trades about 0.1 of its potential returns per unit of risk. American Beacon Select is currently generating about 0.13 per unit of risk. If you would invest 4,136 in Sprott Uranium Miners on August 29, 2024 and sell it today you would earn a total of 588.00 from holding Sprott Uranium Miners or generate 14.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprott Uranium Miners vs. American Beacon Select
Performance |
| Timeline |
| Sprott Uranium Miners |
| American Beacon Select |
Sprott Uranium and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprott Uranium and American Beacon
The main advantage of trading using opposite Sprott Uranium and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Uranium 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.| Sprott Uranium vs. SPDR SP Global | Sprott Uranium vs. FlexShares Morningstar Global | Sprott Uranium vs. SPDR Russell 1000 | Sprott Uranium vs. SPDR MSCI EAFE |
| American Beacon vs. First Trust Exchange Traded | American Beacon vs. Ultimus Managers Trust | American Beacon vs. Horizon Kinetics Medical | American Beacon vs. Harbor Health Care |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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