Correlation Between American Beacon and American Beacon
Can any of the company-specific risk be diversified away by investing in both American Beacon and American Beacon 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 Beacon 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 Beacon Soundpointfltrtinc, you can compare the effects of market volatilities on American Beacon and American Beacon 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 Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and American Beacon.
Diversification Opportunities for American Beacon and American Beacon
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and American is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Funds and American Beacon Soundpointfltr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Soun 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 Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Soun has no effect on the direction of American Beacon i.e., American Beacon and American Beacon go up and down completely randomly.
Pair Corralation between American Beacon and American Beacon
Assuming the 90 days horizon American Beacon Funds is expected to generate 0.85 times more return on investment than American Beacon. However, American Beacon Funds is 1.18 times less risky than American Beacon. It trades about 0.25 of its potential returns per unit of risk. American Beacon Soundpointfltrtinc is currently generating about 0.13 per unit of risk. If you would invest 739.00 in American Beacon Funds on August 29, 2024 and sell it today you would earn a total of 119.00 from holding American Beacon Funds or generate 16.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Funds vs. American Beacon Soundpointfltr
Performance |
| Timeline |
| American Beacon Funds |
| American Beacon Soun |
American Beacon and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and American Beacon
The main advantage of trading using opposite American Beacon and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, American Beacon 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 Beacon will offset losses from the drop in American Beacon's long position.| American Beacon vs. Pimco Income Fund | American Beacon vs. HUMANA INC | American Beacon vs. Aquagold International | American Beacon vs. Barloworld Ltd ADR |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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