Correlation Between Columbia Emerging and American Beacon
Can any of the company-specific risk be diversified away by investing in both Columbia Emerging 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 Columbia Emerging and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Emerging Markets and American Beacon Select, you can compare the effects of market volatilities on Columbia Emerging 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 Columbia Emerging with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Emerging and American Beacon.
Diversification Opportunities for Columbia Emerging and American Beacon
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Columbia and American is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Emerging Markets and American Beacon Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Select and Columbia Emerging 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 Columbia Emerging Markets 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 Select has no effect on the direction of Columbia Emerging i.e., Columbia Emerging and American Beacon go up and down completely randomly.
Pair Corralation between Columbia Emerging and American Beacon
Given the investment horizon of 90 days Columbia Emerging is expected to generate 8.52 times less return on investment than American Beacon. But when comparing it to its historical volatility, Columbia Emerging Markets is 1.48 times less risky than American Beacon. It trades about 0.02 of its potential returns per unit of risk. American Beacon Select is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,423 in American Beacon Select on September 12, 2024 and sell it today you would earn a total of 756.00 from holding American Beacon Select or generate 31.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 60.8% |
| Values | Daily Returns |
Columbia Emerging Markets vs. American Beacon Select
Performance |
| Timeline |
| Columbia Emerging Markets |
| American Beacon Select |
Columbia Emerging and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Emerging and American Beacon
The main advantage of trading using opposite Columbia Emerging and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Emerging 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.| Columbia Emerging vs. SPDR SP Emerging | Columbia Emerging vs. WisdomTree Emerging Markets | Columbia Emerging vs. WisdomTree Emerging Markets | Columbia Emerging vs. SPDR SP Emerging |
| American Beacon vs. Columbia Emerging Markets | American Beacon vs. Direxion Daily Homebuilders | American Beacon vs. Direxion Daily Cnsmr | American Beacon vs. Fidelity MSCI Consumer |
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 Stocks Directory module to find actively traded stocks across global markets.
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