Correlation Between Vanguard Mid and American Beacon
Can any of the company-specific risk be diversified away by investing in both Vanguard Mid 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 Vanguard Mid and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Mid Cap Value and American Beacon Shapiro, you can compare the effects of market volatilities on Vanguard Mid 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 Vanguard Mid with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mid and American Beacon.
Diversification Opportunities for Vanguard Mid and American Beacon
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and American is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Value and American Beacon Shapiro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Shapiro and Vanguard Mid 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 Vanguard Mid Cap Value 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 Shapiro has no effect on the direction of Vanguard Mid i.e., Vanguard Mid and American Beacon go up and down completely randomly.
Pair Corralation between Vanguard Mid and American Beacon
Assuming the 90 days horizon Vanguard Mid Cap Value is expected to generate 0.89 times more return on investment than American Beacon. However, Vanguard Mid Cap Value is 1.12 times less risky than American Beacon. It trades about -0.09 of its potential returns per unit of risk. American Beacon Shapiro is currently generating about -0.09 per unit of risk. If you would invest 6,747 in Vanguard Mid Cap Value on September 13, 2024 and sell it today you would lose (72.00) from holding Vanguard Mid Cap Value or give up 1.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vanguard Mid Cap Value vs. American Beacon Shapiro
Performance |
| Timeline |
| Vanguard Mid Cap |
| American Beacon Shapiro |
Vanguard Mid and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Mid and American Beacon
The main advantage of trading using opposite Vanguard Mid and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mid 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.| Vanguard Mid vs. Vanguard Materials Index | Vanguard Mid vs. Vanguard Limited Term Tax Exempt | Vanguard Mid vs. Vanguard Limited Term Tax Exempt | Vanguard Mid vs. Vanguard Global Minimum |
| American Beacon vs. American Beacon Ssi | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Twentyfour |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |