Correlation Between Mid Cap and American Beacon
Can any of the company-specific risk be diversified away by investing in both Mid Cap 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 Mid Cap and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Cap Value Profund and American Beacon Bridgeway, you can compare the effects of market volatilities on Mid Cap 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 Mid Cap with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and American Beacon.
Diversification Opportunities for Mid Cap and American Beacon
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mid and American is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Value Profund and American Beacon Bridgeway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Bridgeway and Mid Cap 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 Mid Cap Value Profund 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 Bridgeway has no effect on the direction of Mid Cap i.e., Mid Cap and American Beacon go up and down completely randomly.
Pair Corralation between Mid Cap and American Beacon
Assuming the 90 days horizon Mid Cap Value Profund is expected to generate 1.16 times more return on investment than American Beacon. However, Mid Cap is 1.16 times more volatile than American Beacon Bridgeway. It trades about 0.07 of its potential returns per unit of risk. American Beacon Bridgeway is currently generating about 0.05 per unit of risk. If you would invest 7,512 in Mid Cap Value Profund on September 12, 2024 and sell it today you would earn a total of 1,866 from holding Mid Cap Value Profund or generate 24.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Cap Value Profund vs. American Beacon Bridgeway
Performance |
| Timeline |
| Mid Cap Value |
| American Beacon Bridgeway |
Mid Cap and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and American Beacon
The main advantage of trading using opposite Mid Cap and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap 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.| Mid Cap vs. Inverse Government Long | Mid Cap vs. Schwab Government Money | Mid Cap vs. Goldman Sachs Government | Mid Cap vs. Payden Government Fund |
| American Beacon vs. Queens Road Small | American Beacon vs. Boston Partners Small | American Beacon vs. Lsv Small Cap | American Beacon vs. Fpa Queens Road |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |