Correlation Between Palmer Square and American Beacon
Can any of the company-specific risk be diversified away by investing in both Palmer Square 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 Palmer Square and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palmer Square Ssi and American Beacon Ssi, you can compare the effects of market volatilities on Palmer Square 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 Palmer Square with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palmer Square and American Beacon.
Diversification Opportunities for Palmer Square and American Beacon
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Palmer and American is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Palmer Square Ssi and American Beacon Ssi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Ssi and Palmer Square 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 Palmer Square Ssi 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 Ssi has no effect on the direction of Palmer Square i.e., Palmer Square and American Beacon go up and down completely randomly.
Pair Corralation between Palmer Square and American Beacon
Assuming the 90 days horizon Palmer Square Ssi is expected to generate about the same return on investment as American Beacon Ssi. But, Palmer Square Ssi is 1.05 times less risky than American Beacon. It trades about 0.23 of its potential returns per unit of risk. American Beacon Ssi is currently generating about 0.22 per unit of risk. If you would invest 992.00 in American Beacon Ssi on September 27, 2024 and sell it today you would earn a total of 9.00 from holding American Beacon Ssi or generate 0.91% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Palmer Square Ssi vs. American Beacon Ssi
Performance |
Timeline |
Palmer Square Ssi |
American Beacon Ssi |
Palmer Square and American Beacon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Palmer Square and American Beacon
The main advantage of trading using opposite Palmer Square and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palmer Square 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.Palmer Square vs. Pimco Short Asset | Palmer Square vs. Doubleline Low Duration | Palmer Square vs. Dfa One Year Fixed | Palmer Square vs. Short Term Income Fund |
American Beacon vs. Palmer Square Ssi | American Beacon vs. Ontrack E Fund | American Beacon vs. Westwood Market Neutral | American Beacon vs. Jpmorgan Research Market |
Check out your portfolio center.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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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