Correlation Between Western Asset and American Beacon
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset E and American Beacon Bridgeway, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and American Beacon.
Diversification Opportunities for Western Asset and American Beacon
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and American is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset E and American Beacon Bridgeway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Bridgeway and Western Asset 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 Western Asset E 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 Bridgeway has no effect on the direction of Western Asset i.e., Western Asset and American Beacon go up and down completely randomly.
Pair Corralation between Western Asset and American Beacon
Assuming the 90 days horizon Western Asset is expected to generate 6.84 times less return on investment than American Beacon. But when comparing it to its historical volatility, Western Asset E is 2.04 times less risky than American Beacon. It trades about 0.03 of its potential returns per unit of risk. American Beacon Bridgeway is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,434 in American Beacon Bridgeway on September 1, 2024 and sell it today you would earn a total of 422.00 from holding American Beacon Bridgeway or generate 17.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset E vs. American Beacon Bridgeway
Performance |
| Timeline |
| Western Asset E |
| American Beacon Bridgeway |
Western Asset and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and American Beacon
The main advantage of trading using opposite Western Asset and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Clearbridge Aggressive Growth | Western Asset vs. Clearbridge Small Cap | Western Asset vs. Qs International Equity | Western Asset vs. Clearbridge Appreciation Fund |
| American Beacon vs. Amg Managers Skyline | American Beacon vs. The Hartford International | American Beacon vs. Baird E Plus | American Beacon vs. Artisan Developing World |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |