Correlation Between Sa Worldwide and American Beacon
Can any of the company-specific risk be diversified away by investing in both Sa Worldwide 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 Sa Worldwide and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sa Worldwide Moderate and American Beacon Bridgeway, you can compare the effects of market volatilities on Sa Worldwide 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 Sa Worldwide with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sa Worldwide and American Beacon.
Diversification Opportunities for Sa Worldwide and American Beacon
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SAWMX and American is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Sa Worldwide Moderate and American Beacon Bridgeway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Bridgeway and Sa Worldwide 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 Sa Worldwide Moderate 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 Bridgeway has no effect on the direction of Sa Worldwide i.e., Sa Worldwide and American Beacon go up and down completely randomly.
Pair Corralation between Sa Worldwide and American Beacon
Assuming the 90 days horizon Sa Worldwide is expected to generate 1.06 times less return on investment than American Beacon. But when comparing it to its historical volatility, Sa Worldwide Moderate is 2.03 times less risky than American Beacon. It trades about 0.14 of its potential returns per unit of risk. American Beacon Bridgeway is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,348 in American Beacon Bridgeway on September 14, 2024 and sell it today you would earn a total of 434.00 from holding American Beacon Bridgeway or generate 18.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.63% |
| Values | Daily Returns |
Sa Worldwide Moderate vs. American Beacon Bridgeway
Performance |
| Timeline |
| Sa Worldwide Moderate |
| American Beacon Bridgeway |
Sa Worldwide and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sa Worldwide and American Beacon
The main advantage of trading using opposite Sa Worldwide and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sa Worldwide 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.| Sa Worldwide vs. American Funds Inflation | Sa Worldwide vs. Lord Abbett Inflation | Sa Worldwide vs. Short Duration Inflation | Sa Worldwide vs. Blackrock Inflation Protected |
| American Beacon vs. Blackrock Moderate Prepared | American Beacon vs. Qs Moderate Growth | American Beacon vs. Strategic Allocation Moderate | American Beacon vs. Sa Worldwide Moderate |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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