Correlation Between SPACE and American Beacon

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

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

Diversification Opportunities for SPACE and American Beacon

0.09

Correlation Coefficient

SPACE  American Beacon

Significant diversification

The 3 months correlation between SPACE and American is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding SPACE and American Beacon International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Inte and SPACE 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 SPACE 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 Inte has no effect on the direction of SPACE i.e., SPACE and American Beacon go up and down completely randomly.

Pair Corralation between SPACE and American Beacon

Assuming the 90 days horizon SPACE is expected to under-perform the American Beacon. In addition to that, SPACE is 4.6 times more volatile than American Beacon International. It trades about -0.15 of its total potential returns per unit of risk. American Beacon International is currently generating about 0.22 per unit of volatility. If you would invest  1,480  in American Beacon International on October 24, 2024 and sell it today you would earn a total of  57.00  from holding American Beacon International or generate 3.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	85.71%
Values	Daily Returns

SPACE  vs.  American Beacon International

SPACE

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SPACE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, SPACE exhibited solid returns over the last few months and may actually be approaching a breakup point.

American Beacon Inte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Beacon International has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with SPACE and American Beacon

The main advantage of trading using opposite SPACE and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPACE 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 SPACE and American Beacon International 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.