Correlation Between American Beacon and Lkcm Equity
Can any of the company-specific risk be diversified away by investing in both American Beacon and Lkcm Equity 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 Lkcm Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Ahl and Lkcm Equity Fund, you can compare the effects of market volatilities on American Beacon and Lkcm Equity 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 Lkcm Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Lkcm Equity.
Diversification Opportunities for American Beacon and Lkcm Equity
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Lkcm is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Ahl and Lkcm Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lkcm Equity Fund 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 Ahl are associated (or correlated) with Lkcm Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lkcm Equity Fund has no effect on the direction of American Beacon i.e., American Beacon and Lkcm Equity go up and down completely randomly.
Pair Corralation between American Beacon and Lkcm Equity
Assuming the 90 days horizon American Beacon Ahl is expected to under-perform the Lkcm Equity. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Beacon Ahl is 1.46 times less risky than Lkcm Equity. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Lkcm Equity Fund is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,195 in Lkcm Equity Fund on November 2, 2024 and sell it today you would earn a total of 610.00 from holding Lkcm Equity Fund or generate 19.09% 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 Ahl vs. Lkcm Equity Fund
Performance |
| Timeline |
| American Beacon Ahl |
| Lkcm Equity Fund |
American Beacon and Lkcm Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Lkcm Equity
The main advantage of trading using opposite American Beacon and Lkcm Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Lkcm Equity 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 Lkcm Equity will offset losses from the drop in Lkcm Equity's long position.| American Beacon vs. Tax Managed Mid Small | American Beacon vs. Davenport Small Cap | American Beacon vs. Harbor Diversified International | American Beacon vs. Global Diversified Income |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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