Correlation Between Science Technology and American Beacon
Can any of the company-specific risk be diversified away by investing in both Science 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 Science 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 Science Technology Fund and American Beacon Bridgeway, you can compare the effects of market volatilities on Science 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 Science Technology with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Science Technology and American Beacon.
Diversification Opportunities for Science Technology and American Beacon
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Science and American is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Science Technology Fund and American Beacon Bridgeway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Bridgeway and Science 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 Science Technology Fund 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 Bridgeway has no effect on the direction of Science Technology i.e., Science Technology and American Beacon go up and down completely randomly.
Pair Corralation between Science Technology and American Beacon
Assuming the 90 days horizon Science Technology Fund is expected to generate 1.19 times more return on investment than American Beacon. However, Science Technology is 1.19 times more volatile than American Beacon Bridgeway. It trades about 0.08 of its potential returns per unit of risk. American Beacon Bridgeway is currently generating about 0.01 per unit of risk. If you would invest 2,324 in Science Technology Fund on November 3, 2024 and sell it today you would earn a total of 622.00 from holding Science Technology Fund or generate 26.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Science Technology Fund vs. American Beacon Bridgeway
Performance |
| Timeline |
| Science Technology |
| American Beacon Bridgeway |
Science Technology and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Science Technology and American Beacon
The main advantage of trading using opposite Science Technology and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Science 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.| Science Technology vs. Jpmorgan Diversified Fund | Science Technology vs. Stone Ridge Diversified | Science Technology vs. Jhancock Diversified Macro | Science Technology vs. Wells Fargo Diversified |
| American Beacon vs. Aqr Diversified Arbitrage | American Beacon vs. Delaware Limited Term Diversified | American Beacon vs. Stone Ridge Diversified | American Beacon vs. Allianzgi Diversified Income |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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