Correlation Between American Beacon and Undiscovered Managers
Can any of the company-specific risk be diversified away by investing in both American Beacon and Undiscovered Managers 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 Undiscovered Managers 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 Undiscovered Managers Behavioral, you can compare the effects of market volatilities on American Beacon and Undiscovered Managers 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 Undiscovered Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Undiscovered Managers.
Diversification Opportunities for American Beacon and Undiscovered Managers
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and UNDISCOVERED is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Small and Undiscovered Managers Behavior in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Undiscovered Managers 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 Undiscovered Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Undiscovered Managers has no effect on the direction of American Beacon i.e., American Beacon and Undiscovered Managers go up and down completely randomly.
Pair Corralation between American Beacon and Undiscovered Managers
Assuming the 90 days horizon American Beacon Small is expected to generate 1.06 times more return on investment than Undiscovered Managers. However, American Beacon is 1.06 times more volatile than Undiscovered Managers Behavioral. It trades about 0.25 of its potential returns per unit of risk. Undiscovered Managers Behavioral is currently generating about 0.25 per unit of risk. If you would invest 2,714 in American Beacon Small on August 27, 2024 and sell it today you would earn a total of 232.00 from holding American Beacon Small or generate 8.55% 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. Undiscovered Managers Behavior
Performance |
| Timeline |
| American Beacon Small |
| Undiscovered Managers |
American Beacon and Undiscovered Managers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Undiscovered Managers
The main advantage of trading using opposite American Beacon and Undiscovered Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Undiscovered Managers 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 Undiscovered Managers will offset losses from the drop in Undiscovered Managers' 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 |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |