Correlation Between Virtus Kar and American Beacon

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

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

Diversification Opportunities for Virtus Kar and American Beacon

0.86

Correlation Coefficient

Virtus Kar  American Beacon

Very poor diversification

The 3 months correlation between Virtus and American is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Kar Capital and American Beacon Sga in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Sga and Virtus Kar 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 Virtus Kar Capital 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 Sga has no effect on the direction of Virtus Kar i.e., Virtus Kar and American Beacon go up and down completely randomly.

Pair Corralation between Virtus Kar and American Beacon

Assuming the 90 days horizon Virtus Kar Capital is expected to generate 1.18 times more return on investment than American Beacon. However, Virtus Kar is 1.18 times more volatile than American Beacon Sga. It trades about 0.18 of its potential returns per unit of risk. American Beacon Sga is currently generating about 0.1 per unit of risk. If you would invest  1,286  in Virtus Kar Capital on September 13, 2024 and sell it today you would earn a total of  132.00  from holding Virtus Kar Capital or generate 10.26% return on investment over 90 days.

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

Virtus Kar Capital  vs.  American Beacon Sga

Virtus Kar Capital

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Kar Capital are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Virtus Kar may actually be approaching a critical reversion point that can send shares even higher in January 2025.

American Beacon Sga

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Beacon Sga are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic 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 Virtus Kar and American Beacon

The main advantage of trading using opposite Virtus Kar and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Kar 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 Virtus Kar Capital and American Beacon Sga 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.