Correlation Between American Beacon and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both American Beacon and Baillie Gifford 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 Baillie Gifford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon The and Baillie Gifford Health, you can compare the effects of market volatilities on American Beacon and Baillie Gifford 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 Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Baillie Gifford.
Diversification Opportunities for American Beacon and Baillie Gifford
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Baillie is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon The and Baillie Gifford Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford Health 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 The are associated (or correlated) with Baillie Gifford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baillie Gifford Health has no effect on the direction of American Beacon i.e., American Beacon and Baillie Gifford go up and down completely randomly.
Pair Corralation between American Beacon and Baillie Gifford
Assuming the 90 days horizon American Beacon The is expected to generate 0.41 times more return on investment than Baillie Gifford. However, American Beacon The is 2.44 times less risky than Baillie Gifford. It trades about 0.31 of its potential returns per unit of risk. Baillie Gifford Health is currently generating about -0.04 per unit of risk. If you would invest 2,369 in American Beacon The on September 4, 2024 and sell it today you would earn a total of 96.00 from holding American Beacon The or generate 4.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
American Beacon The vs. Baillie Gifford Health
Performance |
| Timeline |
| American Beacon |
| Baillie Gifford Health |
American Beacon and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Baillie Gifford
The main advantage of trading using opposite American Beacon and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Baillie Gifford 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 Baillie Gifford will offset losses from the drop in Baillie Gifford's long position.| American Beacon vs. Vanguard Windsor Fund | American Beacon vs. Jhancock Disciplined Value | American Beacon vs. Pace Large Value | American Beacon vs. M Large Cap |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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