Correlation Between Gmo Resources and American Beacon
Can any of the company-specific risk be diversified away by investing in both Gmo Resources 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 Resources 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 Resources and American Beacon Funds, you can compare the effects of market volatilities on Gmo Resources 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 Resources with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Resources and American Beacon.
Diversification Opportunities for Gmo Resources and American Beacon
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Gmo and American is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Resources and American Beacon Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Funds and Gmo Resources 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 Resources 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 Funds has no effect on the direction of Gmo Resources i.e., Gmo Resources and American Beacon go up and down completely randomly.
Pair Corralation between Gmo Resources and American Beacon
Assuming the 90 days horizon Gmo Resources is expected to under-perform the American Beacon. In addition to that, Gmo Resources is 9.6 times more volatile than American Beacon Funds. It trades about -0.05 of its total potential returns per unit of risk. American Beacon Funds is currently generating about 0.26 per unit of volatility. If you would invest 818.00 in American Beacon Funds on September 1, 2024 and sell it today you would earn a total of 39.00 from holding American Beacon Funds or generate 4.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Gmo Resources vs. American Beacon Funds
Performance |
| Timeline |
| Gmo Resources |
| American Beacon Funds |
Gmo Resources and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Resources and American Beacon
The main advantage of trading using opposite Gmo Resources and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Resources 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 Resources vs. Rbb Fund | Gmo Resources vs. Omni Small Cap Value | Gmo Resources vs. Nasdaq 100 Index Fund | Gmo Resources vs. Artisan Thematic Fund |
| American Beacon vs. Health Care Fund | American Beacon vs. Alger Health Sciences | American Beacon vs. Allianzgi Health Sciences | American Beacon vs. Eventide Healthcare Life |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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