Correlation Between American Beacon and Northern Small
Can any of the company-specific risk be diversified away by investing in both American Beacon and Northern Small 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 Northern Small 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 Northern Small Cap, you can compare the effects of market volatilities on American Beacon and Northern Small 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 Northern Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Northern Small.
Diversification Opportunities for American Beacon and Northern Small
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Northern is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Large and Northern Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Small 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 Large are associated (or correlated) with Northern Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Small Cap has no effect on the direction of American Beacon i.e., American Beacon and Northern Small go up and down completely randomly.
Pair Corralation between American Beacon and Northern Small
Assuming the 90 days horizon American Beacon Large is expected to generate 0.56 times more return on investment than Northern Small. However, American Beacon Large is 1.77 times less risky than Northern Small. It trades about 0.12 of its potential returns per unit of risk. Northern Small Cap is currently generating about 0.07 per unit of risk. If you would invest 2,404 in American Beacon Large on August 29, 2024 and sell it today you would earn a total of 739.00 from holding American Beacon Large or generate 30.74% 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. Northern Small Cap
Performance |
| Timeline |
| American Beacon Large |
| Northern Small Cap |
American Beacon and Northern Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Northern Small
The main advantage of trading using opposite American Beacon and Northern Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Northern Small 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 Northern Small will offset losses from the drop in Northern Small's long position.| American Beacon vs. Allianzgi Convertible Income | American Beacon vs. Virtus Convertible | American Beacon vs. Gabelli Convertible And | American Beacon vs. Fidelity Sai Convertible |
| Northern Small vs. Vanguard Small Cap Value | Northern Small vs. Vanguard Small Cap Value | Northern Small vs. Us Small Cap | Northern Small vs. Us Targeted Value |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |