Correlation Between American Beacon and Auer Growth
Can any of the company-specific risk be diversified away by investing in both American Beacon and Auer Growth 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 Auer Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Small and Auer Growth Fund, you can compare the effects of market volatilities on American Beacon and Auer Growth 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 Auer Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Auer Growth.
Diversification Opportunities for American Beacon and Auer Growth
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Auer is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Small and Auer Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auer Growth 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 Small are associated (or correlated) with Auer Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auer Growth Fund has no effect on the direction of American Beacon i.e., American Beacon and Auer Growth go up and down completely randomly.
Pair Corralation between American Beacon and Auer Growth
Assuming the 90 days horizon American Beacon Small is expected to under-perform the Auer Growth. In addition to that, American Beacon is 1.01 times more volatile than Auer Growth Fund. It trades about -0.14 of its total potential returns per unit of risk. Auer Growth Fund is currently generating about -0.07 per unit of volatility. If you would invest 1,376 in Auer Growth Fund on November 22, 2024 and sell it today you would lose (17.00) from holding Auer Growth Fund or give up 1.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Small vs. Auer Growth Fund
Performance |
| Timeline |
| American Beacon Small |
| Auer Growth Fund |
American Beacon and Auer Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Auer Growth
The main advantage of trading using opposite American Beacon and Auer Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Auer Growth 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 Auer Growth will offset losses from the drop in Auer Growth's long position.| American Beacon vs. American Beacon International | American Beacon vs. American Beacon Large | American Beacon vs. Fidelity Low Priced Stock | American Beacon vs. Europacific Growth Fund |
| Auer Growth vs. Lebenthal Lisanti Small | Auer Growth vs. Hodges Small Cap | Auer Growth vs. Schwartz Value Focused | Auer Growth vs. Oberweis Small Cap Opportunities |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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