Correlation Between Europacific Growth and American Beacon
Can any of the company-specific risk be diversified away by investing in both Europacific Growth 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 Europacific Growth and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Europacific Growth Fund and American Beacon Small, you can compare the effects of market volatilities on Europacific Growth 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 Europacific Growth with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europacific Growth and American Beacon.
Diversification Opportunities for Europacific Growth and American Beacon
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Europacific and American is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Europacific Growth Fund and American Beacon Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Small and Europacific Growth 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 Europacific Growth Fund 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 Small has no effect on the direction of Europacific Growth i.e., Europacific Growth and American Beacon go up and down completely randomly.
Pair Corralation between Europacific Growth and American Beacon
Assuming the 90 days horizon Europacific Growth Fund is expected to generate 0.67 times more return on investment than American Beacon. However, Europacific Growth Fund is 1.5 times less risky than American Beacon. It trades about 0.0 of its potential returns per unit of risk. American Beacon Small is currently generating about -0.01 per unit of risk. If you would invest 5,721 in Europacific Growth Fund on December 4, 2024 and sell it today you would lose (30.00) from holding Europacific Growth Fund or give up 0.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Europacific Growth Fund vs. American Beacon Small
Performance |
| Timeline |
| Europacific Growth |
| American Beacon Small |
Europacific Growth and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Europacific Growth and American Beacon
The main advantage of trading using opposite Europacific Growth and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europacific Growth 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.| Europacific Growth vs. Growth Fund Of | Europacific Growth vs. Vanguard Institutional Index | Europacific Growth vs. Vanguard Mid Cap Index | Europacific Growth vs. Washington Mutual Investors |
| American Beacon vs. American Beacon Large | American Beacon vs. Growth Fund Of | American Beacon vs. American Beacon International | American Beacon vs. Artisan Mid Cap |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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