Correlation Between Gmo Global and American Beacon
Can any of the company-specific risk be diversified away by investing in both Gmo 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 Gmo 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 Gmo Global Equity and American Beacon Shapiro, you can compare the effects of market volatilities on Gmo 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 Gmo Global with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Global and American Beacon.
Diversification Opportunities for Gmo Global and American Beacon
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Gmo and American is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Global Equity and American Beacon Shapiro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Shapiro and Gmo 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 Gmo Global Equity 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 Shapiro has no effect on the direction of Gmo Global i.e., Gmo Global and American Beacon go up and down completely randomly.
Pair Corralation between Gmo Global and American Beacon
Assuming the 90 days horizon Gmo Global Equity is expected to generate 0.65 times more return on investment than American Beacon. However, Gmo Global Equity is 1.54 times less risky than American Beacon. It trades about 0.09 of its potential returns per unit of risk. American Beacon Shapiro is currently generating about 0.03 per unit of risk. If you would invest 2,210 in Gmo Global Equity on September 5, 2024 and sell it today you would earn a total of 823.00 from holding Gmo Global Equity or generate 37.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Gmo Global Equity vs. American Beacon Shapiro
Performance |
| Timeline |
| Gmo Global Equity |
| American Beacon Shapiro |
Gmo Global and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Global and American Beacon
The main advantage of trading using opposite Gmo Global and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo 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.| Gmo Global vs. Fidelity Capital Income | Gmo Global vs. Siit High Yield | Gmo Global vs. Goldman Sachs High | Gmo Global vs. Alpine High Yield |
| American Beacon vs. American Beacon Ssi | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Twentyfour |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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