Correlation Between Versatile Bond and American Beacon
Can any of the company-specific risk be diversified away by investing in both Versatile Bond 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 Versatile Bond and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Versatile Bond Portfolio and American Beacon Shapiro, you can compare the effects of market volatilities on Versatile Bond 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 Versatile Bond with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Versatile Bond and American Beacon.
Diversification Opportunities for Versatile Bond and American Beacon
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Versatile and American is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Versatile Bond Portfolio and American Beacon Shapiro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Shapiro and Versatile Bond 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 Versatile Bond Portfolio 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 Shapiro has no effect on the direction of Versatile Bond i.e., Versatile Bond and American Beacon go up and down completely randomly.
Pair Corralation between Versatile Bond and American Beacon
Assuming the 90 days horizon Versatile Bond Portfolio is expected to generate 0.14 times more return on investment than American Beacon. However, Versatile Bond Portfolio is 7.08 times less risky than American Beacon. It trades about 0.2 of its potential returns per unit of risk. American Beacon Shapiro is currently generating about -0.09 per unit of risk. If you would invest 6,395 in Versatile Bond Portfolio on September 13, 2024 and sell it today you would earn a total of 24.00 from holding Versatile Bond Portfolio or generate 0.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Versatile Bond Portfolio vs. American Beacon Shapiro
Performance |
| Timeline |
| Versatile Bond Portfolio |
| American Beacon Shapiro |
Versatile Bond and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Versatile Bond and American Beacon
The main advantage of trading using opposite Versatile Bond and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Versatile Bond 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.| Versatile Bond vs. Short Term Treasury Portfolio | Versatile Bond vs. Aggressive Growth Portfolio | Versatile Bond vs. Permanent Portfolio Class | Versatile Bond vs. Thompson Bond Fund |
| American Beacon vs. American Beacon Ssi | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Twentyfour |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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