Correlation Between Baird Midcap and American Beacon
Can any of the company-specific risk be diversified away by investing in both Baird Midcap and American Beacon 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 Baird Midcap and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baird Midcap Fund and American Beacon Stephens, you can compare the effects of market volatilities on Baird Midcap and American Beacon 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 Baird Midcap with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Midcap and American Beacon.
Diversification Opportunities for Baird Midcap and American Beacon
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Baird and American is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Baird Midcap Fund and American Beacon Stephens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Stephens and Baird Midcap 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 Baird Midcap Fund are associated (or correlated) with American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Stephens has no effect on the direction of Baird Midcap i.e., Baird Midcap and American Beacon go up and down completely randomly.
Pair Corralation between Baird Midcap and American Beacon
Assuming the 90 days horizon Baird Midcap Fund is expected to under-perform the American Beacon. In addition to that, Baird Midcap is 1.03 times more volatile than American Beacon Stephens. It trades about -0.01 of its total potential returns per unit of risk. American Beacon Stephens is currently generating about 0.05 per unit of volatility. If you would invest 2,885 in American Beacon Stephens on November 3, 2024 and sell it today you would earn a total of 294.00 from holding American Beacon Stephens or generate 10.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Baird Midcap Fund vs. American Beacon Stephens
Performance |
| Timeline |
| Baird Midcap |
| American Beacon Stephens |
Baird Midcap and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baird Midcap and American Beacon
The main advantage of trading using opposite Baird Midcap and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baird Midcap position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Baird Midcap vs. Franklin Lifesmart Retirement | Baird Midcap vs. Dimensional Retirement Income | Baird Midcap vs. Tiaa Cref Lifecycle Retirement | Baird Midcap vs. Tiaa Cref Lifestyle Moderate |
| American Beacon vs. American Beacon Stephens | American Beacon vs. American Beacon Stephens | American Beacon vs. American Beacon Stephens | American Beacon vs. American Beacon Stephens |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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