Correlation Between Red Oak and American Beacon
Can any of the company-specific risk be diversified away by investing in both Red Oak 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 Red Oak and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Oak Technology and American Beacon Ssi, you can compare the effects of market volatilities on Red Oak 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 Red Oak with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Oak and American Beacon.
Diversification Opportunities for Red Oak and American Beacon
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Red and American is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Red Oak Technology 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 Red Oak 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 Red Oak Technology 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 Red Oak i.e., Red Oak and American Beacon go up and down completely randomly.
Pair Corralation between Red Oak and American Beacon
Assuming the 90 days horizon Red Oak Technology is expected to under-perform the American Beacon. In addition to that, Red Oak is 21.74 times more volatile than American Beacon Ssi. It trades about -0.06 of its total potential returns per unit of risk. American Beacon Ssi is currently generating about 0.46 per unit of volatility. If you would invest 990.00 in American Beacon Ssi on December 2, 2024 and sell it today you would earn a total of 19.00 from holding American Beacon Ssi or generate 1.92% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Red Oak Technology vs. American Beacon Ssi
Performance |
Timeline |
Red Oak Technology |
American Beacon Ssi |
Red Oak and American Beacon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Red Oak and American Beacon
The main advantage of trading using opposite Red Oak and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Oak 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.Red Oak vs. Pin Oak Equity | Red Oak vs. White Oak Select | Red Oak vs. Black Oak Emerging | Red Oak vs. Berkshire Focus |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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