Correlation Between American Beacon and Abr 7525

Can any of the company-specific risk be diversified away by investing in both American Beacon and Abr 7525 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 American Beacon and Abr 7525 into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for American Beacon and Abr 7525

0.88

Correlation Coefficient

American Beacon  Abr 7525

Very poor diversification

The 3 months correlation between American and Abr is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Small and Abr 7525 Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abr 7525 Volatility and American Beacon 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 American Beacon Small are associated (or correlated) with Abr 7525. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abr 7525 Volatility has no effect on the direction of American Beacon i.e., American Beacon and Abr 7525 go up and down completely randomly.

Pair Corralation between American Beacon and Abr 7525

Assuming the 90 days horizon American Beacon is expected to generate 2.09 times less return on investment than Abr 7525. In addition to that, American Beacon is 1.8 times more volatile than Abr 7525 Volatility. It trades about 0.07 of its total potential returns per unit of risk. Abr 7525 Volatility is currently generating about 0.28 per unit of volatility. If you would invest  1,091  in Abr 7525 Volatility on September 17, 2024 and sell it today you would earn a total of  27.00  from holding Abr 7525 Volatility or generate 2.47% return on investment over 90 days.

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

American Beacon Small  vs.  Abr 7525 Volatility

American Beacon Small

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Beacon Small are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, American Beacon may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Abr 7525 Volatility

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Abr 7525 Volatility are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking indicators, Abr 7525 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with American Beacon and Abr 7525

The main advantage of trading using opposite American Beacon and Abr 7525 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Abr 7525 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 Abr 7525 will offset losses from the drop in Abr 7525's long position.

The idea behind American Beacon Small and Abr 7525 Volatility 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.