Correlation Between Multisector Bond and American Beacon
Can any of the company-specific risk be diversified away by investing in both Multisector Bond 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 Multisector Bond and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multisector Bond Sma and American Beacon Sim, you can compare the effects of market volatilities on Multisector Bond 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 Multisector Bond with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multisector Bond and American Beacon.
Diversification Opportunities for Multisector Bond and American Beacon
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Multisector and American is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Multisector Bond Sma and American Beacon Sim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Sim and Multisector Bond 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 Multisector Bond Sma 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 Sim has no effect on the direction of Multisector Bond i.e., Multisector Bond and American Beacon go up and down completely randomly.
Pair Corralation between Multisector Bond and American Beacon
Assuming the 90 days horizon Multisector Bond is expected to generate 1.54 times less return on investment than American Beacon. In addition to that, Multisector Bond is 1.41 times more volatile than American Beacon Sim. It trades about 0.07 of its total potential returns per unit of risk. American Beacon Sim is currently generating about 0.15 per unit of volatility. If you would invest 911.00 in American Beacon Sim on October 24, 2024 and sell it today you would earn a total of 17.00 from holding American Beacon Sim or generate 1.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multisector Bond Sma vs. American Beacon Sim
Performance |
| Timeline |
| Multisector Bond Sma |
| American Beacon Sim |
Multisector Bond and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multisector Bond and American Beacon
The main advantage of trading using opposite Multisector Bond and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multisector Bond 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.| Multisector Bond vs. Lord Abbett Inflation | Multisector Bond vs. Simt Multi Asset Inflation | Multisector Bond vs. Guggenheim Managed Futures | Multisector Bond vs. Ab Bond Inflation |
| American Beacon vs. Multisector Bond Sma | American Beacon vs. Nuveen High Yield | American Beacon vs. Siit High Yield | American Beacon vs. Georgia Tax Free Bond |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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