Correlation Between American Beacon and Wp Large
Can any of the company-specific risk be diversified away by investing in both American Beacon and Wp Large 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 Wp Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Bridgeway and Wp Large Cap, you can compare the effects of market volatilities on American Beacon and Wp Large 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 Wp Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Wp Large.
Diversification Opportunities for American Beacon and Wp Large
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and WPLCX is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Bridgeway and Wp Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wp Large Cap 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 Bridgeway are associated (or correlated) with Wp Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wp Large Cap has no effect on the direction of American Beacon i.e., American Beacon and Wp Large go up and down completely randomly.
Pair Corralation between American Beacon and Wp Large
Assuming the 90 days horizon American Beacon is expected to generate 1.04 times less return on investment than Wp Large. But when comparing it to its historical volatility, American Beacon Bridgeway is 1.12 times less risky than Wp Large. It trades about 0.08 of its potential returns per unit of risk. Wp Large Cap is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,471 in Wp Large Cap on September 20, 2024 and sell it today you would earn a total of 72.00 from holding Wp Large Cap or generate 4.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
American Beacon Bridgeway vs. Wp Large Cap
Performance |
Timeline |
American Beacon Bridgeway |
Wp Large Cap |
American Beacon and Wp Large Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Beacon and Wp Large
The main advantage of trading using opposite American Beacon and Wp Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Wp Large 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 Wp Large will offset losses from the drop in Wp Large's long position.American Beacon vs. Qs Moderate Growth | American Beacon vs. Sa Worldwide Moderate | American Beacon vs. Wilmington Trust Retirement | American Beacon vs. Jp Morgan Smartretirement |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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