Correlation Between American Beacon and GPOW
Can any of the company-specific risk be diversified away by investing in both American Beacon and GPOW 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 American Beacon and GPOW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Select and GPOW, you can compare the effects of market volatilities on American Beacon and GPOW 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 American Beacon with a short position of GPOW. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and GPOW.
Diversification Opportunities for American Beacon and GPOW
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and GPOW is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Select and GPOW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GPOW and American Beacon 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 American Beacon Select are associated (or correlated) with GPOW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GPOW has no effect on the direction of American Beacon i.e., American Beacon and GPOW go up and down completely randomly.
Pair Corralation between American Beacon and GPOW
Given the investment horizon of 90 days American Beacon Select is expected to generate 0.99 times more return on investment than GPOW. However, American Beacon Select is 1.01 times less risky than GPOW. It trades about 0.09 of its potential returns per unit of risk. GPOW is currently generating about -0.01 per unit of risk. If you would invest 3,143 in American Beacon Select on September 12, 2024 and sell it today you would earn a total of 64.03 from holding American Beacon Select or generate 2.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Select vs. GPOW
Performance |
| Timeline |
| American Beacon Select |
| GPOW |
American Beacon and GPOW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and GPOW
The main advantage of trading using opposite American Beacon and GPOW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, GPOW 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 GPOW will offset losses from the drop in GPOW's long position.| American Beacon vs. Columbia Emerging Markets | American Beacon vs. Direxion Daily Homebuilders | American Beacon vs. Direxion Daily Cnsmr | American Beacon vs. Fidelity MSCI Consumer |
| GPOW vs. Ultimus Managers Trust | GPOW vs. Direxion Daily SP | GPOW vs. EA Series Trust | GPOW vs. Global X MLP |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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