Correlation Between Mesirow Financial and American Beacon
Can any of the company-specific risk be diversified away by investing in both Mesirow Financial 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 Mesirow Financial and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mesirow Financial Small and American Beacon Twentyfour, you can compare the effects of market volatilities on Mesirow Financial 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 Mesirow Financial with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesirow Financial and American Beacon.
Diversification Opportunities for Mesirow Financial and American Beacon
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mesirow and American is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Mesirow Financial Small and American Beacon Twentyfour in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Twen and Mesirow Financial 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 Mesirow Financial 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 Twen has no effect on the direction of Mesirow Financial i.e., Mesirow Financial and American Beacon go up and down completely randomly.
Pair Corralation between Mesirow Financial and American Beacon
Assuming the 90 days horizon Mesirow Financial Small is expected to generate 16.36 times more return on investment than American Beacon. However, Mesirow Financial is 16.36 times more volatile than American Beacon Twentyfour. It trades about 0.04 of its potential returns per unit of risk. American Beacon Twentyfour is currently generating about 0.24 per unit of risk. If you would invest 1,233 in Mesirow Financial Small on November 3, 2024 and sell it today you would earn a total of 69.00 from holding Mesirow Financial Small or generate 5.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mesirow Financial Small vs. American Beacon Twentyfour
Performance |
| Timeline |
| Mesirow Financial Small |
| American Beacon Twen |
Mesirow Financial and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesirow Financial and American Beacon
The main advantage of trading using opposite Mesirow Financial and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesirow Financial 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.| Mesirow Financial vs. Ab Bond Inflation | Mesirow Financial vs. Ab Global Bond | Mesirow Financial vs. Doubleline Total Return | Mesirow Financial vs. Barings High Yield |
| American Beacon vs. Gabelli Global Financial | American Beacon vs. Vanguard Money Market | American Beacon vs. John Hancock Money | American Beacon vs. 1919 Financial Services |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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