Correlation Between Pimco Small and American Beacon
Can any of the company-specific risk be diversified away by investing in both Pimco Small 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 Small 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 Small Cap and American Beacon Global, you can compare the effects of market volatilities on Pimco Small 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 Small with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Small and American Beacon.
Diversification Opportunities for Pimco Small and American Beacon
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pimco and American is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Small Cap and American Beacon Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Global and Pimco Small 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 Small Cap 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 Global has no effect on the direction of Pimco Small i.e., Pimco Small and American Beacon go up and down completely randomly.
Pair Corralation between Pimco Small and American Beacon
Assuming the 90 days horizon Pimco Small Cap is expected to generate 9.66 times more return on investment than American Beacon. However, Pimco Small is 9.66 times more volatile than American Beacon Global. It trades about 0.24 of its potential returns per unit of risk. American Beacon Global is currently generating about 0.26 per unit of risk. If you would invest 798.00 in Pimco Small Cap on August 29, 2024 and sell it today you would earn a total of 74.00 from holding Pimco Small Cap or generate 9.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Small Cap vs. American Beacon Global
Performance |
| Timeline |
| Pimco Small Cap |
| American Beacon Global |
Pimco Small and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Small and American Beacon
The main advantage of trading using opposite Pimco Small and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Small 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 Small vs. Neuberger Berman Real | Pimco Small vs. Goldman Sachs Balanced | Pimco Small vs. Fundamental Indexplus Tr | Pimco Small vs. Pimco International Stocksplus |
| 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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