Correlation Between Gmo High and American Beacon
Can any of the company-specific risk be diversified away by investing in both Gmo High 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 High 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 High Yield and American Beacon Stephens, you can compare the effects of market volatilities on Gmo High 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 High with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo High and American Beacon.
Diversification Opportunities for Gmo High and American Beacon
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gmo and American is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Gmo High Yield and American Beacon Stephens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Stephens and Gmo High 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 High Yield 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 Stephens has no effect on the direction of Gmo High i.e., Gmo High and American Beacon go up and down completely randomly.
Pair Corralation between Gmo High and American Beacon
Assuming the 90 days horizon Gmo High is expected to generate 1.44 times less return on investment than American Beacon. But when comparing it to its historical volatility, Gmo High Yield is 4.06 times less risky than American Beacon. It trades about 0.13 of its potential returns per unit of risk. American Beacon Stephens is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,327 in American Beacon Stephens on August 30, 2024 and sell it today you would earn a total of 360.00 from holding American Beacon Stephens or generate 27.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 82.83% |
| Values | Daily Returns |
Gmo High Yield vs. American Beacon Stephens
Performance |
| Timeline |
| Gmo High Yield |
| American Beacon Stephens |
Gmo High and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo High and American Beacon
The main advantage of trading using opposite Gmo High and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo High 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 High vs. Lifestyle Ii Moderate | Gmo High vs. Franklin Lifesmart Retirement | Gmo High vs. Pgim Conservative Retirement | Gmo High vs. Target Retirement 2040 |
| American Beacon vs. Ab Select Longshort | American Beacon vs. Calvert Short Duration | American Beacon vs. Maryland Short Term Tax Free | American Beacon vs. Aqr Long Short Equity |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |