Correlation Between American Beacon and Touchstone Small
Can any of the company-specific risk be diversified away by investing in both American Beacon and Touchstone 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 Touchstone Small 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 Touchstone Small Cap, you can compare the effects of market volatilities on American Beacon and Touchstone 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 Touchstone Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Touchstone Small.
Diversification Opportunities for American Beacon and Touchstone Small
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Touchstone is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Stephens and Touchstone Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone 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 Stephens are associated (or correlated) with Touchstone Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Small Cap has no effect on the direction of American Beacon i.e., American Beacon and Touchstone Small go up and down completely randomly.
Pair Corralation between American Beacon and Touchstone Small
Assuming the 90 days horizon American Beacon is expected to generate 1.06 times less return on investment than Touchstone Small. But when comparing it to its historical volatility, American Beacon Stephens is 1.05 times less risky than Touchstone Small. It trades about 0.3 of its potential returns per unit of risk. Touchstone Small Cap is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 3,811 in Touchstone Small Cap on September 2, 2024 and sell it today you would earn a total of 366.00 from holding Touchstone Small Cap or generate 9.6% 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. Touchstone Small Cap
Performance |
| Timeline |
| American Beacon Stephens |
| Touchstone Small Cap |
American Beacon and Touchstone Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Touchstone Small
The main advantage of trading using opposite American Beacon and Touchstone Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Touchstone 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 Touchstone Small will offset losses from the drop in Touchstone Small's long position.| American Beacon vs. The Short Term | American Beacon vs. Angel Oak Ultrashort | American Beacon vs. Ultra Short Fixed Income | American Beacon vs. Astor Longshort Fund |
| Touchstone Small vs. Wisdomtree Siegel Global | Touchstone Small vs. Kinetics Global Fund | Touchstone Small vs. Rbc Global Opportunities | Touchstone Small vs. Us Global Investors |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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