Correlation Between Federated Global and American Beacon
Can any of the company-specific risk be diversified away by investing in both Federated Global 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 Federated Global and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Global Allocation and American Beacon Ark, you can compare the effects of market volatilities on Federated Global 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 Federated Global with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Global and American Beacon.
Diversification Opportunities for Federated Global and American Beacon
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Federated and American is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Federated Global Allocation and American Beacon Ark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Ark and Federated Global 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 Federated Global Allocation 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 Ark has no effect on the direction of Federated Global i.e., Federated Global and American Beacon go up and down completely randomly.
Pair Corralation between Federated Global and American Beacon
Assuming the 90 days horizon Federated Global is expected to generate 2.21 times less return on investment than American Beacon. But when comparing it to its historical volatility, Federated Global Allocation is 4.11 times less risky than American Beacon. It trades about 0.1 of its potential returns per unit of risk. American Beacon Ark is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,628 in American Beacon Ark on October 25, 2024 and sell it today you would earn a total of 30.00 from holding American Beacon Ark or generate 1.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Global Allocation vs. American Beacon Ark
Performance |
| Timeline |
| Federated Global All |
| American Beacon Ark |
Federated Global and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Global and American Beacon
The main advantage of trading using opposite Federated Global and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Global 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.| Federated Global vs. Federated Max Cap Index | Federated Global vs. Federated Kaufmann Fund | Federated Global vs. Federated Strategic Income | Federated Global vs. Federated Bond Fund |
| American Beacon vs. Dreyfus Government Cash | American Beacon vs. Elfun Government Money | American Beacon vs. Short Term Government Fund | American Beacon vs. Virtus Seix Government |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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