Correlation Between American Beacon and NYSE Composite
Can any of the company-specific risk be diversified away by investing in both American Beacon and NYSE Composite 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 NYSE Composite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Large and NYSE Composite, you can compare the effects of market volatilities on American Beacon and NYSE Composite 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 NYSE Composite. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and NYSE Composite.
Diversification Opportunities for American Beacon and NYSE Composite
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between American and NYSE is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Large and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite 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 Large are associated (or correlated) with NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of American Beacon i.e., American Beacon and NYSE Composite go up and down completely randomly.
Pair Corralation between American Beacon and NYSE Composite
Assuming the 90 days horizon American Beacon is expected to generate 1.09 times less return on investment than NYSE Composite. In addition to that, American Beacon is 1.03 times more volatile than NYSE Composite. It trades about 0.11 of its total potential returns per unit of risk. NYSE Composite is currently generating about 0.13 per unit of volatility. If you would invest 1,853,914 in NYSE Composite on June 21, 2024 and sell it today you would earn a total of 89,328 from holding NYSE Composite or generate 4.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
American Beacon Large vs. NYSE Composite
Performance |
Timeline |
American Beacon and NYSE Composite Volatility Contrast
Predicted Return Density |
Returns |
American Beacon Large
Pair trading matchups for American Beacon
NYSE Composite
Pair trading matchups for NYSE Composite
Pair Trading with American Beacon and NYSE Composite
The main advantage of trading using opposite American Beacon and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, NYSE Composite 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 NYSE Composite will offset losses from the drop in NYSE Composite's long position.American Beacon vs. Calvert Global Energy | American Beacon vs. Alpsalerian Energy Infrastructure | American Beacon vs. World Energy Fund | American Beacon vs. Hennessy Bp Energy |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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