Correlation Between Amer Beacon and Power Global

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

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

Diversification Opportunities for Amer Beacon and Power Global

0.83

Correlation Coefficient

Amer Beacon  Power Global

Very poor diversification

The 3 months correlation between Amer and Power is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Amer Beacon Ark and Power Global Tactical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Global Tactical and Amer 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 Amer Beacon Ark are associated (or correlated) with Power Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Global Tactical has no effect on the direction of Amer Beacon i.e., Amer Beacon and Power Global go up and down completely randomly.

Pair Corralation between Amer Beacon and Power Global

Assuming the 90 days horizon Amer Beacon Ark is expected to generate 8.63 times more return on investment than Power Global. However, Amer Beacon is 8.63 times more volatile than Power Global Tactical. It trades about 0.13 of its potential returns per unit of risk. Power Global Tactical is currently generating about 0.06 per unit of risk. If you would invest  1,516  in Amer Beacon Ark on September 19, 2024 and sell it today you would earn a total of  96.00  from holding Amer Beacon Ark or generate 6.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Amer Beacon Ark  vs.  Power Global Tactical

Amer Beacon Ark

Risk-Adjusted Performance

11 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amer Beacon Ark are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Amer Beacon showed solid returns over the last few months and may actually be approaching a breakup point.

Power Global Tactical

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Power Global Tactical are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Power Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amer Beacon and Power Global

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

The idea behind Amer Beacon Ark and Power Global Tactical 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.