Correlation Between Heartland Value and American Beacon
Can any of the company-specific risk be diversified away by investing in both Heartland Value 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 Heartland Value and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heartland Value Plus and American Beacon International, you can compare the effects of market volatilities on Heartland Value 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 Heartland Value with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heartland Value and American Beacon.
Diversification Opportunities for Heartland Value and American Beacon
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Heartland and American is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Value Plus and American Beacon International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Inte and Heartland Value 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 Heartland Value Plus 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 Inte has no effect on the direction of Heartland Value i.e., Heartland Value and American Beacon go up and down completely randomly.
Pair Corralation between Heartland Value and American Beacon
Assuming the 90 days horizon Heartland Value is expected to generate 2.21 times less return on investment than American Beacon. In addition to that, Heartland Value is 1.38 times more volatile than American Beacon International. It trades about 0.02 of its total potential returns per unit of risk. American Beacon International is currently generating about 0.06 per unit of volatility. If you would invest 1,603 in American Beacon International on September 3, 2024 and sell it today you would earn a total of 416.00 from holding American Beacon International or generate 25.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heartland Value Plus vs. American Beacon International
Performance |
| Timeline |
| Heartland Value Plus |
| American Beacon Inte |
Heartland Value and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heartland Value and American Beacon
The main advantage of trading using opposite Heartland Value and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heartland Value 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.| Heartland Value vs. Lkcm Small Mid Cap | Heartland Value vs. Precious Metals And | Heartland Value vs. American Beacon International | Heartland Value vs. Hotchkis Wiley Small |
| American Beacon vs. Oakmark International Fund | American Beacon vs. Dodge International Stock | American Beacon vs. Oakmark International Fund | American Beacon vs. Oakmark International Fund |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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