Correlation Between Jacob Micro and Amer Beacon

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

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

Diversification Opportunities for Jacob Micro and Amer Beacon

0.61

Correlation Coefficient

Jacob Micro  Amer Beacon

Poor diversification

The 3 months correlation between Jacob and Amer is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Jacob Micro Cap and Amer Beacon Ark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amer Beacon Ark and Jacob Micro 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 Jacob Micro Cap are associated (or correlated) with Amer Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amer Beacon Ark has no effect on the direction of Jacob Micro i.e., Jacob Micro and Amer Beacon go up and down completely randomly.

Pair Corralation between Jacob Micro and Amer Beacon

Assuming the 90 days horizon Jacob Micro is expected to generate 1.78 times less return on investment than Amer Beacon. But when comparing it to its historical volatility, Jacob Micro Cap is 1.46 times less risky than Amer Beacon. It trades about 0.02 of its potential returns per unit of risk. Amer Beacon Ark is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,351  in Amer Beacon Ark on December 5, 2024 and sell it today you would earn a total of  74.00  from holding Amer Beacon Ark or generate 5.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Jacob Micro Cap  vs.  Amer Beacon Ark

Jacob Micro Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jacob Micro Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Amer Beacon Ark

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amer Beacon Ark has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Jacob Micro and Amer Beacon

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

The idea behind Jacob Micro Cap and Amer Beacon Ark 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.