Correlation Between American Beacon and Leuthold Select
Can any of the company-specific risk be diversified away by investing in both American Beacon and Leuthold Select 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 Leuthold Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Twentyfour and Leuthold Select Industries, you can compare the effects of market volatilities on American Beacon and Leuthold Select 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 Leuthold Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Leuthold Select.
Diversification Opportunities for American Beacon and Leuthold Select
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Leuthold is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Twentyfour and Leuthold Select Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leuthold Select Indu 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 Twentyfour are associated (or correlated) with Leuthold Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leuthold Select Indu has no effect on the direction of American Beacon i.e., American Beacon and Leuthold Select go up and down completely randomly.
Pair Corralation between American Beacon and Leuthold Select
Assuming the 90 days horizon American Beacon is expected to generate 2.09 times less return on investment than Leuthold Select. But when comparing it to its historical volatility, American Beacon Twentyfour is 6.81 times less risky than Leuthold Select. It trades about 0.12 of its potential returns per unit of risk. Leuthold Select Industries is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,985 in Leuthold Select Industries on September 14, 2024 and sell it today you would earn a total of 548.00 from holding Leuthold Select Industries or generate 18.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Twentyfour vs. Leuthold Select Industries
Performance |
| Timeline |
| American Beacon Twen |
| Leuthold Select Indu |
American Beacon and Leuthold Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Leuthold Select
The main advantage of trading using opposite American Beacon and Leuthold Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Leuthold Select 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 Leuthold Select will offset losses from the drop in Leuthold Select's long position.| American Beacon vs. Morningstar Unconstrained Allocation | American Beacon vs. Old Westbury Large | American Beacon vs. Alternative Asset Allocation | American Beacon vs. T Rowe Price |
| Leuthold Select vs. Stone Ridge Diversified | Leuthold Select vs. Wealthbuilder Conservative Allocation | Leuthold Select vs. Tax Free Conservative Income | Leuthold Select vs. Calvert Conservative Allocation |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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