Correlation Between American Beacon and Ab Bond
Can any of the company-specific risk be diversified away by investing in both American Beacon and Ab Bond 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 Ab Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Balanced and Ab Bond Inflation, you can compare the effects of market volatilities on American Beacon and Ab Bond 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 Ab Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Ab Bond.
Diversification Opportunities for American Beacon and Ab Bond
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and ABNCX is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Balanced and Ab Bond Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Bond Inflation 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 Balanced are associated (or correlated) with Ab Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Bond Inflation has no effect on the direction of American Beacon i.e., American Beacon and Ab Bond go up and down completely randomly.
Pair Corralation between American Beacon and Ab Bond
Assuming the 90 days horizon American Beacon Balanced is expected to generate 2.07 times more return on investment than Ab Bond. However, American Beacon is 2.07 times more volatile than Ab Bond Inflation. It trades about 0.14 of its potential returns per unit of risk. Ab Bond Inflation is currently generating about 0.09 per unit of risk. If you would invest 1,221 in American Beacon Balanced on September 14, 2024 and sell it today you would earn a total of 234.00 from holding American Beacon Balanced or generate 19.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Balanced vs. Ab Bond Inflation
Performance |
| Timeline |
| American Beacon Balanced |
| Ab Bond Inflation |
American Beacon and Ab Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Ab Bond
The main advantage of trading using opposite American Beacon and Ab Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Ab Bond 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 Ab Bond will offset losses from the drop in Ab Bond's long position.| American Beacon vs. Ab Bond Inflation | American Beacon vs. American Funds Inflation | American Beacon vs. Simt Multi Asset Inflation | American Beacon vs. Schwab Treasury Inflation |
| Ab Bond vs. Ab Global E | Ab Bond vs. Ab Global E | Ab Bond vs. Ab Global E | Ab Bond vs. Ab Minnesota Portfolio |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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