Correlation Between American Beacon and Space
Can any of the company-specific risk be diversified away by investing in both American Beacon and Space 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 Space 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 Space Com, you can compare the effects of market volatilities on American Beacon and Space 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 Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Space.
Diversification Opportunities for American Beacon and Space
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Space is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Small and Space Com in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Space Com 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 Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Space Com has no effect on the direction of American Beacon i.e., American Beacon and Space go up and down completely randomly.
Pair Corralation between American Beacon and Space
Assuming the 90 days horizon American Beacon Small is expected to under-perform the Space. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Beacon Small is 3.2 times less risky than Space. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Space Com is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 6,020 in Space Com on January 24, 2024 and sell it today you would lose (20.00) from holding Space Com or give up 0.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 85.0% |
| Values | Daily Returns |
American Beacon Small vs. Space Com
Performance |
| Timeline |
| American Beacon Small |
| Space Com |
American Beacon and Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Space
The main advantage of trading using opposite American Beacon and Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Space 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 Space will offset losses from the drop in Space's long position.| American Beacon vs. American Beacon Ssi | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Twentyfour |
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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 Stocks Directory module to find actively traded stocks across global markets.
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