Correlation Between Great West and American Beacon
Can any of the company-specific risk be diversified away by investing in both Great West 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 Great West and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great West Loomis Sayles and American Beacon Intl, you can compare the effects of market volatilities on Great West 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 Great West with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and American Beacon.
Diversification Opportunities for Great West and American Beacon
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Great and American is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Great West Loomis Sayles and American Beacon Intl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Intl and Great West 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 Great West Loomis Sayles 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 Intl has no effect on the direction of Great West i.e., Great West and American Beacon go up and down completely randomly.
Pair Corralation between Great West and American Beacon
Assuming the 90 days horizon Great West Loomis Sayles is expected to generate 1.52 times more return on investment than American Beacon. However, Great West is 1.52 times more volatile than American Beacon Intl. It trades about 0.06 of its potential returns per unit of risk. American Beacon Intl is currently generating about 0.05 per unit of risk. If you would invest 3,366 in Great West Loomis Sayles on September 12, 2024 and sell it today you would earn a total of 724.00 from holding Great West Loomis Sayles or generate 21.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great West Loomis Sayles vs. American Beacon Intl
Performance |
| Timeline |
| Great West Loomis |
| American Beacon Intl |
Great West and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great West and American Beacon
The main advantage of trading using opposite Great West and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great West 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.| Great West vs. Vanguard Small Cap Value | Great West vs. Vanguard Small Cap Value | Great West vs. Us Small Cap | Great West vs. Us Targeted Value |
| American Beacon vs. Amg River Road | American Beacon vs. Great West Loomis Sayles | American Beacon vs. Omni Small Cap Value | American Beacon vs. Palm Valley Capital |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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