Correlation Between American Beacon and Prudential Qma

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Can any of the company-specific risk be diversified away by investing in both American Beacon and Prudential Qma 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 Prudential Qma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Mid Cap and Prudential Qma Mid Cap, you can compare the effects of market volatilities on American Beacon and Prudential Qma 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 Prudential Qma. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Prudential Qma.

Diversification Opportunities for American Beacon and Prudential Qma

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between American and Prudential is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AMERICAN BEACON MID-CAP and PRUDENTIAL QMA MID-CAP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Qma Mid-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 Mid Cap are associated (or correlated) with Prudential Qma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Qma Mid-cap has no effect on the direction of American Beacon i.e., American Beacon and Prudential Qma go up and down completely randomly.

Pair Corralation between American Beacon and Prudential Qma

If you would invest  1,659  in Prudential Qma Mid Cap on December 29, 2023 and sell it today you would earn a total of  307.00  from holding Prudential Qma Mid Cap or generate 18.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

AMERICAN BEACON MID-CAP  vs.  PRUDENTIAL QMA MID-CAP

 Performance 
       Timeline  
American Beacon Mid-cap 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days American Beacon Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. 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.
Prudential Qma Mid-cap 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Qma Mid Cap are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly fragile basic indicators, Prudential Qma may actually be approaching a critical reversion point that can send shares even higher in April 2024.

American Beacon and Prudential Qma Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Beacon and Prudential Qma

The main advantage of trading using opposite American Beacon and Prudential Qma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Prudential Qma 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 Prudential Qma will offset losses from the drop in Prudential Qma's long position.
The idea behind American Beacon Mid Cap and Prudential Qma Mid Cap 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.
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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