Correlation Between Invesco Gold and American Beacon
Can any of the company-specific risk be diversified away by investing in both Invesco Gold 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 Invesco Gold and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Gold Special and American Beacon Large, you can compare the effects of market volatilities on Invesco Gold 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 Invesco Gold with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Gold and American Beacon.
Diversification Opportunities for Invesco Gold and American Beacon
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Invesco and American is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Gold Special and American Beacon Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Large and Invesco Gold 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 Invesco Gold Special 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 Large has no effect on the direction of Invesco Gold i.e., Invesco Gold and American Beacon go up and down completely randomly.
Pair Corralation between Invesco Gold and American Beacon
Assuming the 90 days horizon Invesco Gold Special is expected to generate 1.17 times more return on investment than American Beacon. However, Invesco Gold is 1.17 times more volatile than American Beacon Large. It trades about -0.02 of its potential returns per unit of risk. American Beacon Large is currently generating about -0.08 per unit of risk. If you would invest 2,960 in Invesco Gold Special on November 2, 2024 and sell it today you would lose (85.00) from holding Invesco Gold Special or give up 2.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Gold Special vs. American Beacon Large
Performance |
| Timeline |
| Invesco Gold Special |
| American Beacon Large |
Invesco Gold and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Gold and American Beacon
The main advantage of trading using opposite Invesco Gold and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Gold 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.| Invesco Gold vs. Oklahoma College Savings | Invesco Gold vs. Ab Small Cap | Invesco Gold vs. Df Dent Small | Invesco Gold vs. Ab Small Cap |
| American Beacon vs. Madison Diversified Income | American Beacon vs. Mainstay Conservative Allocation | American Beacon vs. American Funds Conservative | American Beacon vs. Diversified Income 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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