Correlation Between American Beacon and Vanguard Small
Can any of the company-specific risk be diversified away by investing in both American Beacon and Vanguard 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 Vanguard 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 Vanguard Small Cap Value, you can compare the effects of market volatilities on American Beacon and Vanguard 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 Vanguard Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Vanguard Small.
Diversification Opportunities for American Beacon and Vanguard Small
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Vanguard is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Shapiro and Vanguard Small Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard 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 Vanguard Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Small Cap has no effect on the direction of American Beacon i.e., American Beacon and Vanguard Small go up and down completely randomly.
Pair Corralation between American Beacon and Vanguard Small
Assuming the 90 days horizon American Beacon is expected to generate 1.26 times less return on investment than Vanguard Small. But when comparing it to its historical volatility, American Beacon Shapiro is 1.33 times less risky than Vanguard Small. It trades about 0.34 of its potential returns per unit of risk. Vanguard Small Cap Value is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 4,790 in Vanguard Small Cap Value on September 4, 2024 and sell it today you would earn a total of 396.00 from holding Vanguard Small Cap Value or generate 8.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
American Beacon Shapiro vs. Vanguard Small Cap Value
Performance |
| Timeline |
| American Beacon Shapiro |
| Vanguard Small Cap |
American Beacon and Vanguard Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Vanguard Small
The main advantage of trading using opposite American Beacon and Vanguard Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Vanguard 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 Vanguard Small will offset losses from the drop in Vanguard Small's long position.| American Beacon vs. American Beacon Ssi | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Twentyfour |
| Vanguard Small vs. Ab Global Real | Vanguard Small vs. Legg Mason Global | Vanguard Small vs. Ab Global Real | Vanguard Small vs. Barings Global Floating |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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