Correlation Between American Beacon and Gmo Resources
Can any of the company-specific risk be diversified away by investing in both American Beacon and Gmo Resources 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 Gmo Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Intl and Gmo Resources, you can compare the effects of market volatilities on American Beacon and Gmo Resources 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 Gmo Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Gmo Resources.
Diversification Opportunities for American Beacon and Gmo Resources
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Gmo is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Intl and Gmo Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Resources 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 Intl are associated (or correlated) with Gmo Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Resources has no effect on the direction of American Beacon i.e., American Beacon and Gmo Resources go up and down completely randomly.
Pair Corralation between American Beacon and Gmo Resources
Assuming the 90 days horizon American Beacon Intl is expected to generate 0.61 times more return on investment than Gmo Resources. However, American Beacon Intl is 1.63 times less risky than Gmo Resources. It trades about 0.06 of its potential returns per unit of risk. Gmo Resources is currently generating about -0.01 per unit of risk. If you would invest 1,502 in American Beacon Intl on August 30, 2024 and sell it today you would earn a total of 402.00 from holding American Beacon Intl or generate 26.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Intl vs. Gmo Resources
Performance |
| Timeline |
| American Beacon Intl |
| Gmo Resources |
American Beacon and Gmo Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Gmo Resources
The main advantage of trading using opposite American Beacon and Gmo Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Gmo Resources 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 Gmo Resources will offset losses from the drop in Gmo Resources' long position.| American Beacon vs. Astor Longshort Fund | American Beacon vs. Barings Active Short | American Beacon vs. Sterling Capital Short | American Beacon vs. Quantitative Longshort Equity |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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