Correlation Between Amer Beacon and Forum Funds

Can any of the company-specific risk be diversified away by investing in both Amer Beacon and Forum Funds 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 Amer Beacon and Forum Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amer Beacon Ark and Forum Funds , you can compare the effects of market volatilities on Amer Beacon and Forum Funds 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 Amer Beacon with a short position of Forum Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amer Beacon and Forum Funds.

Diversification Opportunities for Amer Beacon and Forum Funds

0.9

Correlation Coefficient

Amer Beacon  Forum Funds

Almost no diversification

The 3 months correlation between Amer and Forum is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Amer Beacon Ark and Forum Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forum Funds and Amer 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 Amer Beacon Ark are associated (or correlated) with Forum Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forum Funds has no effect on the direction of Amer Beacon i.e., Amer Beacon and Forum Funds go up and down completely randomly.

Pair Corralation between Amer Beacon and Forum Funds

Assuming the 90 days horizon Amer Beacon Ark is expected to generate 16.96 times more return on investment than Forum Funds. However, Amer Beacon is 16.96 times more volatile than Forum Funds . It trades about 0.05 of its potential returns per unit of risk. Forum Funds is currently generating about 0.25 per unit of risk. If you would invest  1,665  in Amer Beacon Ark on October 25, 2024 and sell it today you would earn a total of  30.00  from holding Amer Beacon Ark or generate 1.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	94.74%
Values	Daily Returns

Amer Beacon Ark  vs.  Forum Funds

Amer Beacon Ark

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amer Beacon Ark are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Amer Beacon showed solid returns over the last few months and may actually be approaching a breakup point.

Forum Funds

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Forum Funds are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Forum Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amer Beacon and Forum Funds

The main advantage of trading using opposite Amer Beacon and Forum Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amer Beacon position performs unexpectedly, Forum Funds 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 Forum Funds will offset losses from the drop in Forum Funds' long position.

The idea behind Amer Beacon Ark and Forum Funds pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.