Correlation Between Tortoise Energy and American Beacon
Can any of the company-specific risk be diversified away by investing in both Tortoise Energy 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 Tortoise Energy and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tortoise Energy Independence and American Beacon Bridgeway, you can compare the effects of market volatilities on Tortoise Energy 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 Tortoise Energy with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tortoise Energy and American Beacon.
Diversification Opportunities for Tortoise Energy and American Beacon
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tortoise and American is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Tortoise Energy Independence 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 Tortoise Energy 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 Tortoise Energy Independence 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 Tortoise Energy i.e., Tortoise Energy and American Beacon go up and down completely randomly.
Pair Corralation between Tortoise Energy and American Beacon
Assuming the 90 days horizon Tortoise Energy Independence is expected to under-perform the American Beacon. In addition to that, Tortoise Energy is 1.31 times more volatile than American Beacon Bridgeway. It trades about -0.16 of its total potential returns per unit of risk. American Beacon Bridgeway is currently generating about 0.14 per unit of volatility. If you would invest 3,858 in American Beacon Bridgeway on September 13, 2024 and sell it today you would earn a total of 100.00 from holding American Beacon Bridgeway or generate 2.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tortoise Energy Independence vs. American Beacon Bridgeway
Performance |
| Timeline |
| Tortoise Energy Inde |
| American Beacon Bridgeway |
Tortoise Energy and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tortoise Energy and American Beacon
The main advantage of trading using opposite Tortoise Energy and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tortoise Energy 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.| Tortoise Energy vs. Siit High Yield | Tortoise Energy vs. Calvert High Yield | Tortoise Energy vs. Artisan High Income | Tortoise Energy vs. Franklin High Income |
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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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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