Correlation Between Us Government and American Beacon
Can any of the company-specific risk be diversified away by investing in both Us Government 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 Us Government and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Us Government Securities and American Beacon Shapiro, you can compare the effects of market volatilities on Us Government 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 Us Government with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Government and American Beacon.
Diversification Opportunities for Us Government and American Beacon
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between RGVCX and American is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Securities 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 Us Government 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 Us Government Securities 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 Us Government i.e., Us Government and American Beacon go up and down completely randomly.
Pair Corralation between Us Government and American Beacon
Assuming the 90 days horizon Us Government Securities is expected to generate 0.27 times more return on investment than American Beacon. However, Us Government Securities is 3.69 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 -0.11 per unit of risk. If you would invest 1,184 in Us Government Securities on September 12, 2024 and sell it today you would earn a total of 12.00 from holding Us Government Securities or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Us Government Securities vs. American Beacon Shapiro
Performance |
| Timeline |
| Us Government Securities |
| American Beacon Shapiro |
Us Government and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Government and American Beacon
The main advantage of trading using opposite Us Government and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Government 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.| Us Government vs. California Bond Fund | Us Government vs. Ishares Municipal Bond | Us Government vs. Blrc Sgy Mnp | Us Government vs. Versatile Bond Portfolio |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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