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 Stephens, 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
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Versatile and American is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Versatile Bond Portfolio and American Beacon Stephens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Stephens 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 Stephens 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 under-perform the American Beacon. But the mutual fund apears to be less risky and, when comparing its historical volatility, Versatile Bond Portfolio is 1.48 times less risky than American Beacon. The mutual fund trades about -0.21 of its potential returns per unit of risk. The American Beacon Stephens is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,110 in American Beacon Stephens on September 12, 2024 and sell it today you would earn a total of 52.00 from holding American Beacon Stephens or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Versatile Bond Portfolio vs. American Beacon Stephens
Performance |
| Timeline |
| Versatile Bond Portfolio |
| American Beacon Stephens |
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. Versatile Bond Portfolio | Versatile Bond vs. Prudential Jennison International | Versatile Bond vs. Fidelity New Markets | Versatile Bond vs. Ohio Variable College |
| American Beacon vs. T Rowe Price | American Beacon vs. T Rowe Price | American Beacon vs. SCOR PK | American Beacon vs. Morningstar Unconstrained Allocation |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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