Correlation Between Us Government and American Beacon
Can any of the company-specific risk be diversified away by investing in both Us Government 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 Us Government and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Us Government Securities and American Beacon Large, you can compare the effects of market volatilities on Us Government 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 Us Government with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Government and American Beacon.
Diversification Opportunities for Us Government and American Beacon
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CGTCX and American is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Securities 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 Us Government 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 Us Government Securities 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 Us Government i.e., Us Government and American Beacon go up and down completely randomly.
Pair Corralation between Us Government and American Beacon
Assuming the 90 days horizon Us Government is expected to generate 4.86 times less return on investment than American Beacon. But when comparing it to its historical volatility, Us Government Securities is 1.86 times less risky than American Beacon. It trades about 0.04 of its potential returns per unit of risk. American Beacon Large is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,483 in American Beacon Large on August 30, 2024 and sell it today you would earn a total of 660.00 from holding American Beacon Large or generate 26.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Us Government Securities vs. American Beacon Large
Performance |
| Timeline |
| Us Government Securities |
| American Beacon Large |
Us Government and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Government and American Beacon
The main advantage of trading using opposite Us Government and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Government 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.| Us Government vs. Delaware Limited Term Diversified | Us Government vs. Western Asset Diversified | Us Government vs. Massmutual Premier Diversified | Us Government vs. American Funds Conservative |
| American Beacon vs. Federated Government Ultrashort | American Beacon vs. Dreyfus Government Cash | American Beacon vs. Virtus Seix Government | American Beacon vs. Us Government Securities |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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