Correlation Between Small Company and Amer Beacon

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

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

Diversification Opportunities for Small Company and Amer Beacon

0.0

Correlation Coefficient

Small Company  Amer Beacon

Pay attention - limited upside

The 3 months correlation between Small and Amer is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Small Pany Growth and Amer Beacon Garcia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amer Beacon Garcia and Small Company 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 Small Pany Growth 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 Garcia has no effect on the direction of Small Company i.e., Small Company and Amer Beacon go up and down completely randomly.

Pair Corralation between Small Company and Amer Beacon

Assuming the 90 days horizon Small Pany Growth is expected to generate 4.18 times more return on investment than Amer Beacon. However, Small Company is 4.18 times more volatile than Amer Beacon Garcia. It trades about 0.06 of its potential returns per unit of risk. Amer Beacon Garcia is currently generating about 0.04 per unit of risk. If you would invest  1,212  in Small Pany Growth on December 2, 2024 and sell it today you would earn a total of  300.00  from holding Small Pany Growth or generate 24.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Small Pany Growth  vs.  Amer Beacon Garcia

Small Pany Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Small Pany Growth 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 Garcia

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Amer Beacon Garcia are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Amer 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 Small Company and Amer Beacon

The main advantage of trading using opposite Small Company and Amer Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Company 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 Small Pany Growth and Amer Beacon Garcia 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.