Correlation Between VR and American Beacon
Can any of the company-specific risk be diversified away by investing in both VR 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 VR and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VR and American Beacon Select, you can compare the effects of market volatilities on VR 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 VR with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of VR and American Beacon.
Diversification Opportunities for VR and American Beacon
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VR and American is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding VR 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 VR 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 VR 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 VR i.e., VR and American Beacon go up and down completely randomly.
Pair Corralation between VR and American Beacon
If you would invest 2,423 in American Beacon Select on August 29, 2024 and sell it today you would earn a total of 809.00 from holding American Beacon Select or generate 33.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 0.49% |
| Values | Daily Returns |
VR vs. American Beacon Select
Performance |
| Timeline |
| VR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| American Beacon Select |
VR and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VR and American Beacon
The main advantage of trading using opposite VR and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VR 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.| VR vs. AXIS Capital Holdings | VR vs. Renaissancere Holdings | VR vs. Aspira Womens Health | VR vs. Prenetics Global |
| 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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