Correlation Between American Beacon and Lsv Small
Can any of the company-specific risk be diversified away by investing in both American Beacon and Lsv Small 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 American Beacon and Lsv Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Shapiro and Lsv Small Cap, you can compare the effects of market volatilities on American Beacon and Lsv Small 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 American Beacon with a short position of Lsv Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Lsv Small.
Diversification Opportunities for American Beacon and Lsv Small
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Lsv is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Shapiro and Lsv Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lsv Small Cap and American Beacon 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 American Beacon Shapiro are associated (or correlated) with Lsv Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lsv Small Cap has no effect on the direction of American Beacon i.e., American Beacon and Lsv Small go up and down completely randomly.
Pair Corralation between American Beacon and Lsv Small
Assuming the 90 days horizon American Beacon Shapiro is expected to generate 0.98 times more return on investment than Lsv Small. However, American Beacon Shapiro is 1.02 times less risky than Lsv Small. It trades about -0.32 of its potential returns per unit of risk. Lsv Small Cap is currently generating about -0.37 per unit of risk. If you would invest 1,149 in American Beacon Shapiro on October 9, 2024 and sell it today you would lose (86.00) from holding American Beacon Shapiro or give up 7.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Shapiro vs. Lsv Small Cap
Performance |
| Timeline |
| American Beacon Shapiro |
| Lsv Small Cap |
American Beacon and Lsv Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Lsv Small
The main advantage of trading using opposite American Beacon and Lsv Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Lsv Small 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 Lsv Small will offset losses from the drop in Lsv Small's long position.| American Beacon vs. Lord Abbett Health | American Beacon vs. Deutsche Health And | American Beacon vs. Highland Longshort Healthcare | American Beacon vs. Eventide Healthcare Life |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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