Correlation Between Cmg Ultra and American Beacon
Can any of the company-specific risk be diversified away by investing in both Cmg Ultra 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 Cmg Ultra and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cmg Ultra Short and American Beacon Balanced, you can compare the effects of market volatilities on Cmg Ultra 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 Cmg Ultra with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cmg Ultra and American Beacon.
Diversification Opportunities for Cmg Ultra and American Beacon
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cmg and American is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Cmg Ultra Short and American Beacon Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Balanced and Cmg Ultra 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 Cmg Ultra 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 Balanced has no effect on the direction of Cmg Ultra i.e., Cmg Ultra and American Beacon go up and down completely randomly.
Pair Corralation between Cmg Ultra and American Beacon
Assuming the 90 days horizon Cmg Ultra is expected to generate 2.15 times less return on investment than American Beacon. But when comparing it to its historical volatility, Cmg Ultra Short is 5.79 times less risky than American Beacon. It trades about 0.25 of its potential returns per unit of risk. American Beacon Balanced is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,289 in American Beacon Balanced on September 13, 2024 and sell it today you would earn a total of 347.00 from holding American Beacon Balanced or generate 26.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cmg Ultra Short vs. American Beacon Balanced
Performance |
| Timeline |
| Cmg Ultra Short |
| American Beacon Balanced |
Cmg Ultra and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cmg Ultra and American Beacon
The main advantage of trading using opposite Cmg Ultra and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cmg Ultra 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.| Cmg Ultra vs. Mfs Technology Fund | Cmg Ultra vs. Towpath Technology | Cmg Ultra vs. Science Technology Fund | Cmg Ultra vs. Red Oak Technology |
| American Beacon vs. Virtus Multi Sector Short | American Beacon vs. Kentucky Tax Free Short To Medium | American Beacon vs. Prudential Short Duration | American Beacon vs. Cmg Ultra Short |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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