Correlation Between American Beacon and Hotchkis Wiley
Can any of the company-specific risk be diversified away by investing in both American Beacon and Hotchkis Wiley 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 Hotchkis Wiley 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 Hotchkis Wiley Small, you can compare the effects of market volatilities on American Beacon and Hotchkis Wiley 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 Hotchkis Wiley. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Hotchkis Wiley.
Diversification Opportunities for American Beacon and Hotchkis Wiley
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Hotchkis is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Small and Hotchkis Wiley Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotchkis Wiley Small 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 Hotchkis Wiley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotchkis Wiley Small has no effect on the direction of American Beacon i.e., American Beacon and Hotchkis Wiley go up and down completely randomly.
Pair Corralation between American Beacon and Hotchkis Wiley
Assuming the 90 days horizon American Beacon Small is expected to generate 0.91 times more return on investment than Hotchkis Wiley. However, American Beacon Small is 1.1 times less risky than Hotchkis Wiley. It trades about 0.13 of its potential returns per unit of risk. Hotchkis Wiley Small is currently generating about 0.11 per unit of risk. If you would invest 2,659 in American Beacon Small on August 28, 2024 and sell it today you would earn a total of 287.00 from holding American Beacon Small or generate 10.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Small vs. Hotchkis Wiley Small
Performance |
| Timeline |
| American Beacon Small |
| Hotchkis Wiley Small |
American Beacon and Hotchkis Wiley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Hotchkis Wiley
The main advantage of trading using opposite American Beacon and Hotchkis Wiley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Hotchkis Wiley 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 Hotchkis Wiley will offset losses from the drop in Hotchkis Wiley'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 |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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