Correlation Between Abr 75/25 and American Beacon

Can any of the company-specific risk be diversified away by investing in both Abr 75/25 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 Abr 75/25 and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Abr 7525 Volatility and American Beacon Stephens, you can compare the effects of market volatilities on Abr 75/25 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 Abr 75/25 with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abr 75/25 and American Beacon.

Diversification Opportunities for Abr 75/25 and American Beacon

0.85

Correlation Coefficient

Abr 75/25  American Beacon

Very poor diversification

The 3 months correlation between Abr and American is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Abr 7525 Volatility and American Beacon Stephens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Stephens and Abr 75/25 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 Abr 7525 Volatility 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 Stephens has no effect on the direction of Abr 75/25 i.e., Abr 75/25 and American Beacon go up and down completely randomly.

Pair Corralation between Abr 75/25 and American Beacon

Assuming the 90 days horizon Abr 75/25 is expected to generate 1.76 times less return on investment than American Beacon. In addition to that, Abr 75/25 is 1.28 times more volatile than American Beacon Stephens. It trades about 0.13 of its total potential returns per unit of risk. American Beacon Stephens is currently generating about 0.28 per unit of volatility. If you would invest  3,659  in American Beacon Stephens on September 5, 2024 and sell it today you would earn a total of  580.00  from holding American Beacon Stephens or generate 15.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Abr 7525 Volatility  vs.  American Beacon Stephens

Abr 7525 Volatility

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Abr 7525 Volatility are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking indicators, Abr 75/25 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

American Beacon Stephens

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in American Beacon Stephens are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, American Beacon showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Abr 75/25 and American Beacon

The main advantage of trading using opposite Abr 75/25 and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abr 75/25 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 Abr 7525 Volatility and American Beacon Stephens 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..