Correlation Between Barings Active and American Beacon
Can any of the company-specific risk be diversified away by investing in both Barings Active 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 Barings Active and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings Active Short and American Beacon Large, you can compare the effects of market volatilities on Barings Active 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 Barings Active with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and American Beacon.
Diversification Opportunities for Barings Active and American Beacon
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Barings and American is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and American Beacon Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Large and Barings Active 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 Barings Active Short 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 Large has no effect on the direction of Barings Active i.e., Barings Active and American Beacon go up and down completely randomly.
Pair Corralation between Barings Active and American Beacon
Assuming the 90 days horizon Barings Active is expected to generate 2.55 times less return on investment than American Beacon. But when comparing it to its historical volatility, Barings Active Short is 4.91 times less risky than American Beacon. It trades about 0.16 of its potential returns per unit of risk. American Beacon Large is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,979 in American Beacon Large on August 31, 2024 and sell it today you would earn a total of 684.00 from holding American Beacon Large or generate 34.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Barings Active Short vs. American Beacon Large
Performance |
| Timeline |
| Barings Active Short |
| American Beacon Large |
Barings Active and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and American Beacon
The main advantage of trading using opposite Barings Active and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active 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.| Barings Active vs. Blrc Sgy Mnp | Barings Active vs. Ab Impact Municipal | Barings Active vs. Artisan High Income | Barings Active vs. Maryland Tax Free Bond |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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