Correlation Between Pimco Trends and American Beacon
Can any of the company-specific risk be diversified away by investing in both Pimco Trends 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 Pimco Trends and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Trends Managed and American Beacon Ahl, you can compare the effects of market volatilities on Pimco Trends 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 Pimco Trends with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Trends and American Beacon.
Diversification Opportunities for Pimco Trends and American Beacon
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pimco and American is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Trends Managed and American Beacon Ahl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Ahl and Pimco Trends 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 Pimco Trends Managed 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 Ahl has no effect on the direction of Pimco Trends i.e., Pimco Trends and American Beacon go up and down completely randomly.
Pair Corralation between Pimco Trends and American Beacon
Assuming the 90 days horizon Pimco Trends Managed is expected to under-perform the American Beacon. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pimco Trends Managed is 1.05 times less risky than American Beacon. The mutual fund trades about -0.13 of its potential returns per unit of risk. The American Beacon Ahl is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 1,001 in American Beacon Ahl on November 5, 2024 and sell it today you would lose (12.00) from holding American Beacon Ahl or give up 1.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Trends Managed vs. American Beacon Ahl
Performance |
| Timeline |
| Pimco Trends Managed |
| American Beacon Ahl |
Pimco Trends and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Trends and American Beacon
The main advantage of trading using opposite Pimco Trends and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Trends 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.| Pimco Trends vs. Asg Managed Futures | Pimco Trends vs. Asg Managed Futures | Pimco Trends vs. Aqr Managed Futures | Pimco Trends vs. iMGP DBi Managed |
| American Beacon vs. Davis Financial Fund | American Beacon vs. Blackstone Secured Lending | American Beacon vs. Vanguard Financials Index | American Beacon vs. Transamerica Financial Life |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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