Correlation Between American Beacon and Amg Managers
Can any of the company-specific risk be diversified away by investing in both American Beacon and Amg 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 Amg Managers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Bridgeway and Amg Managers Skyline, you can compare the effects of market volatilities on American Beacon and Amg 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 Amg Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Amg Managers.
Diversification Opportunities for American Beacon and Amg Managers
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Amg is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Bridgeway and Amg Managers Skyline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Managers Skyline 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 Bridgeway are associated (or correlated) with Amg Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Managers Skyline has no effect on the direction of American Beacon i.e., American Beacon and Amg Managers go up and down completely randomly.
Pair Corralation between American Beacon and Amg Managers
Assuming the 90 days horizon American Beacon is expected to generate 2.05 times less return on investment than Amg Managers. But when comparing it to its historical volatility, American Beacon Bridgeway is 1.68 times less risky than Amg Managers. It trades about 0.24 of its potential returns per unit of risk. Amg Managers Skyline is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 3,166 in Amg Managers Skyline on August 29, 2024 and sell it today you would earn a total of 381.00 from holding Amg Managers Skyline or generate 12.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Bridgeway vs. Amg Managers Skyline
Performance |
| Timeline |
| American Beacon Bridgeway |
| Amg Managers Skyline |
American Beacon and Amg Managers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Amg Managers
The main advantage of trading using opposite American Beacon and Amg Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Amg 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 Amg Managers will offset losses from the drop in Amg Managers' long position.| American Beacon vs. Amg Managers Skyline | American Beacon vs. The Hartford International | American Beacon vs. Baird E Plus | American Beacon vs. Artisan Developing World |
| Amg Managers vs. American Beacon Bridgeway | Amg Managers vs. John Hancock Disciplined | Amg Managers vs. Large Cap Fund | Amg Managers vs. Baird E Plus |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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