Correlation Between American Beacon and Hartford Midcap
Can any of the company-specific risk be diversified away by investing in both American Beacon and Hartford Midcap 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 Hartford Midcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Stephens and The Hartford Midcap, you can compare the effects of market volatilities on American Beacon and Hartford Midcap 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 Hartford Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Hartford Midcap.
Diversification Opportunities for American Beacon and Hartford Midcap
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Hartford is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Stephens and The Hartford Midcap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Midcap 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 Stephens are associated (or correlated) with Hartford Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Midcap has no effect on the direction of American Beacon i.e., American Beacon and Hartford Midcap go up and down completely randomly.
Pair Corralation between American Beacon and Hartford Midcap
Assuming the 90 days horizon American Beacon Stephens is expected to generate 1.03 times more return on investment than Hartford Midcap. However, American Beacon is 1.03 times more volatile than The Hartford Midcap. It trades about 0.07 of its potential returns per unit of risk. The Hartford Midcap is currently generating about 0.05 per unit of risk. If you would invest 1,043 in American Beacon Stephens on September 12, 2024 and sell it today you would earn a total of 316.00 from holding American Beacon Stephens or generate 30.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Stephens vs. The Hartford Midcap
Performance |
| Timeline |
| American Beacon Stephens |
| Hartford Midcap |
American Beacon and Hartford Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Hartford Midcap
The main advantage of trading using opposite American Beacon and Hartford Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Hartford Midcap 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 Hartford Midcap will offset losses from the drop in Hartford Midcap's long position.| American Beacon vs. Needham Aggressive Growth | American Beacon vs. Ultramid Cap Profund Ultramid Cap | American Beacon vs. HUMANA INC | American Beacon vs. Barloworld Ltd ADR |
| Hartford Midcap vs. Europacific Growth Fund | Hartford Midcap vs. Washington Mutual Investors | Hartford Midcap vs. Wells Fargo Special | Hartford Midcap vs. Mfs Emerging Markets |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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