Correlation Between American Beacon and American Funds
Can any of the company-specific risk be diversified away by investing in both American Beacon and American Funds 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 American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Funds and American Funds 2015, you can compare the effects of market volatilities on American Beacon and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and American Funds.
Diversification Opportunities for American Beacon and American Funds
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and American is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Funds and American Funds 2015 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2015 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 Funds are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2015 has no effect on the direction of American Beacon i.e., American Beacon and American Funds go up and down completely randomly.
Pair Corralation between American Beacon and American Funds
Assuming the 90 days horizon American Beacon Funds is expected to generate 0.53 times more return on investment than American Funds. However, American Beacon Funds is 1.87 times less risky than American Funds. It trades about 0.14 of its potential returns per unit of risk. American Funds 2015 is currently generating about 0.07 per unit of risk. If you would invest 851.00 in American Beacon Funds on September 12, 2024 and sell it today you would earn a total of 11.00 from holding American Beacon Funds or generate 1.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Funds vs. American Funds 2015
Performance |
| Timeline |
| American Beacon Funds |
| American Funds 2015 |
American Beacon and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and American Funds
The main advantage of trading using opposite American Beacon and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| American Beacon vs. Royce Global Financial | American Beacon vs. Vanguard Financials Index | American Beacon vs. Mesirow Financial Small | American Beacon vs. Gabelli Global Financial |
| American Funds vs. Fidelity Advisor Gold | American Funds vs. Gabelli Gold Fund | American Funds vs. Precious Metals And | American Funds vs. International Investors Gold |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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