Correlation Between Amer Beacon and American Beacon

Can any of the company-specific risk be diversified away by investing in both Amer Beacon 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 Amer Beacon and American Beacon 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 American Beacon Ssi, you can compare the effects of market volatilities on Amer Beacon 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 Amer Beacon with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amer Beacon and American Beacon.

Diversification Opportunities for Amer Beacon and American Beacon

0.86

Correlation Coefficient

Amer Beacon  American Beacon

Very poor diversification

The 3 months correlation between Amer and American is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Amer Beacon Ark 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 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 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 Amer Beacon i.e., Amer Beacon and American Beacon go up and down completely randomly.

Pair Corralation between Amer Beacon and American Beacon

Assuming the 90 days horizon Amer Beacon Ark is expected to generate 26.07 times more return on investment than American Beacon. However, Amer Beacon is 26.07 times more volatile than American Beacon Ssi. It trades about 0.24 of its potential returns per unit of risk. American Beacon Ssi is currently generating about 0.46 per unit of risk. If you would invest  1,193  in Amer Beacon Ark on September 5, 2024 and sell it today you would earn a total of  466.00  from holding Amer Beacon Ark or generate 39.06% return on investment over 90 days.

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

Amer Beacon Ark  vs.  American Beacon Ssi

Amer Beacon Ark

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amer Beacon Ark are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Amer Beacon showed solid returns over the last few months and may actually be approaching a breakup point.

American Beacon Ssi

Risk-Adjusted Performance

36 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in American Beacon Ssi are ranked lower than 36 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking indicators, American Beacon 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 American Beacon

The main advantage of trading using opposite Amer Beacon and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amer Beacon 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 Amer Beacon Ark and American Beacon Ssi 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.