Correlation Between International Fund and American Beacon
Can any of the company-specific risk be diversified away by investing in both International Fund 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 International Fund and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Fund International and American Beacon Bridgeway, you can compare the effects of market volatilities on International Fund 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 International Fund with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Fund and American Beacon.
Diversification Opportunities for International Fund and American Beacon
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between International and American is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding International Fund Internation and American Beacon Bridgeway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Bridgeway and International Fund 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 International Fund International 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 Bridgeway has no effect on the direction of International Fund i.e., International Fund and American Beacon go up and down completely randomly.
Pair Corralation between International Fund and American Beacon
Assuming the 90 days horizon International Fund is expected to generate 5.16 times less return on investment than American Beacon. But when comparing it to its historical volatility, International Fund International is 1.54 times less risky than American Beacon. It trades about 0.06 of its potential returns per unit of risk. American Beacon Bridgeway is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,678 in American Beacon Bridgeway on August 26, 2024 and sell it today you would earn a total of 127.00 from holding American Beacon Bridgeway or generate 4.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Fund Internation vs. American Beacon Bridgeway
Performance |
| Timeline |
| International Fund |
| American Beacon Bridgeway |
International Fund and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Fund and American Beacon
The main advantage of trading using opposite International Fund and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Fund 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.| International Fund vs. Pimco Moditiesplus Strategy | International Fund vs. The Brown Capital | International Fund vs. Goldman Sachs International | International Fund vs. Cohen Steers Real |
| American Beacon vs. Amg Managers Skyline | American Beacon vs. The Hartford International | American Beacon vs. Baird E Plus | American Beacon vs. Artisan Developing World |
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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