Correlation Between Locorr Market and American Beacon
Can any of the company-specific risk be diversified away by investing in both Locorr Market 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 Locorr Market and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Locorr Market Trend and American Beacon Ahl, you can compare the effects of market volatilities on Locorr Market 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 Locorr Market with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Locorr Market and American Beacon.
Diversification Opportunities for Locorr Market and American Beacon
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Locorr and American is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Locorr Market Trend and American Beacon Ahl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Ahl and Locorr Market 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 Locorr Market Trend 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 Ahl has no effect on the direction of Locorr Market i.e., Locorr Market and American Beacon go up and down completely randomly.
Pair Corralation between Locorr Market and American Beacon
Assuming the 90 days horizon Locorr Market is expected to generate 1.37 times less return on investment than American Beacon. In addition to that, Locorr Market is 1.44 times more volatile than American Beacon Ahl. It trades about 0.01 of its total potential returns per unit of risk. American Beacon Ahl is currently generating about 0.02 per unit of volatility. If you would invest 960.00 in American Beacon Ahl on January 24, 2024 and sell it today you would earn a total of 60.00 from holding American Beacon Ahl or generate 6.25% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Locorr Market Trend vs. American Beacon Ahl
Performance |
Timeline |
Locorr Market Trend |
American Beacon Ahl |
Locorr Market and American Beacon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Locorr Market and American Beacon
The main advantage of trading using opposite Locorr Market and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Locorr Market 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.Locorr Market vs. Franklin High Yield | Locorr Market vs. Ab Bond Inflation | Locorr Market vs. Blrc Sgy Mnp | Locorr Market vs. T Rowe Price |
American Beacon vs. T Rowe Price | American Beacon vs. Strategic Allocation Aggressive | American Beacon vs. Morningstar Aggressive Growth | American Beacon vs. California High Yield Municipal |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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