Correlation Between Loomis Sayles and American Beacon
Can any of the company-specific risk be diversified away by investing in both Loomis Sayles 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 Loomis Sayles and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loomis Sayles Small and American Beacon Large, you can compare the effects of market volatilities on Loomis Sayles 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 Loomis Sayles with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loomis Sayles and American Beacon.
Diversification Opportunities for Loomis Sayles and American Beacon
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Loomis and American is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Loomis Sayles Small 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 Loomis Sayles 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 Loomis Sayles Small 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 Loomis Sayles i.e., Loomis Sayles and American Beacon go up and down completely randomly.
Pair Corralation between Loomis Sayles and American Beacon
Assuming the 90 days horizon Loomis Sayles Small is expected to generate 1.75 times more return on investment than American Beacon. However, Loomis Sayles is 1.75 times more volatile than American Beacon Large. It trades about 0.08 of its potential returns per unit of risk. American Beacon Large is currently generating about 0.13 per unit of risk. If you would invest 2,378 in Loomis Sayles Small on September 1, 2024 and sell it today you would earn a total of 297.00 from holding Loomis Sayles Small or generate 12.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Loomis Sayles Small vs. American Beacon Large
Performance |
| Timeline |
| Loomis Sayles Small |
| American Beacon Large |
Loomis Sayles and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loomis Sayles and American Beacon
The main advantage of trading using opposite Loomis Sayles and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loomis Sayles 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.| Loomis Sayles vs. Ssga International Stock | Loomis Sayles vs. Northern Small Cap | Loomis Sayles vs. American Beacon Large |
| American Beacon vs. Northern Small Cap | American Beacon vs. Ssga International Stock | American Beacon vs. American Beacon International | American Beacon vs. Perkins Mid Cap |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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