Correlation Between Astar and American Beacon

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

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

Diversification Opportunities for Astar and American Beacon

0.6

Correlation Coefficient

Astar  American Beacon

Poor diversification

The 3 months correlation between Astar and American is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Astar and American Beacon Soundpointfltr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Soun and Astar 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 Astar 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 Soun has no effect on the direction of Astar i.e., Astar and American Beacon go up and down completely randomly.

Pair Corralation between Astar and American Beacon

Assuming the 90 days trading horizon Astar is expected to under-perform the American Beacon. In addition to that, Astar is 11.93 times more volatile than American Beacon Soundpointfltrtinc. It trades about -0.18 of its total potential returns per unit of risk. American Beacon Soundpointfltrtinc is currently generating about -0.15 per unit of volatility. If you would invest  768.00  in American Beacon Soundpointfltrtinc on December 21, 2024 and sell it today you would lose (28.00) from holding American Beacon Soundpointfltrtinc or give up 3.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.65%
Values	Daily Returns

Astar  vs.  American Beacon Soundpointfltr

Astar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Astar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Astar shareholders.

American Beacon Soun

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Beacon Soundpointfltrtinc has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, American Beacon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Astar and American Beacon

The main advantage of trading using opposite Astar and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar 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.

The idea behind Astar and American Beacon Soundpointfltrtinc 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.