Correlation Between Prudential Qma and American Beacon

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

Diversification Opportunities for Prudential Qma and American Beacon

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Prudential and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PRUDENTIAL QMA MID-CAP and AMERICAN BEACON MID-CAP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Mid-cap and Prudential Qma 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 Prudential Qma Mid Cap 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 Mid-cap has no effect on the direction of Prudential Qma i.e., Prudential Qma and American Beacon go up and down completely randomly.

Pair Corralation between Prudential Qma and American Beacon

If you would invest  0.00  in American Beacon Mid Cap on December 29, 2023 and sell it today you would earn a total of  0.00  from holding American Beacon Mid Cap or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

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

 Performance 
       Timeline  
Prudential Qma Mid-cap 

Risk-Adjusted Performance

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OK
Over the last 90 days Prudential Qma Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak basic indicators, Prudential Qma may actually be approaching a critical reversion point that can send shares even higher in April 2024.
American Beacon Mid-cap 

Risk-Adjusted Performance

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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 and American Beacon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Prudential Qma and American Beacon

The main advantage of trading using opposite Prudential Qma and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Qma 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 Prudential Qma Mid Cap and American Beacon 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.
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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