Correlation Between Europac Gold and American Beacon
Can any of the company-specific risk be diversified away by investing in both Europac Gold 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 Europac Gold and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Europac Gold Fund and American Beacon Large, you can compare the effects of market volatilities on Europac Gold 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 Europac Gold with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europac Gold and American Beacon.
Diversification Opportunities for Europac Gold and American Beacon
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Europac and American is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Europac Gold Fund 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 Europac Gold 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 Europac Gold Fund 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 Europac Gold i.e., Europac Gold and American Beacon go up and down completely randomly.
Pair Corralation between Europac Gold and American Beacon
Assuming the 90 days horizon Europac Gold Fund is expected to generate 1.25 times more return on investment than American Beacon. However, Europac Gold is 1.25 times more volatile than American Beacon Large. It trades about -0.03 of its potential returns per unit of risk. American Beacon Large is currently generating about -0.08 per unit of risk. If you would invest 1,068 in Europac Gold Fund on November 2, 2024 and sell it today you would lose (43.00) from holding Europac Gold Fund or give up 4.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Europac Gold Fund vs. American Beacon Large
Performance |
| Timeline |
| Europac Gold |
| American Beacon Large |
Europac Gold and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Europac Gold and American Beacon
The main advantage of trading using opposite Europac Gold and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europac Gold 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.| Europac Gold vs. Europac International Value | Europac Gold vs. Europac International Dividend | Europac Gold vs. Ep Emerging Markets | Europac Gold vs. Europac International Bond |
| American Beacon vs. Madison Diversified Income | American Beacon vs. Mainstay Conservative Allocation | American Beacon vs. American Funds Conservative | American Beacon vs. Diversified Income Fund |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |