Correlation Between Walden Smid and American Beacon
Can any of the company-specific risk be diversified away by investing in both Walden Smid 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 Walden Smid and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walden Smid Cap and American Beacon Stephens, you can compare the effects of market volatilities on Walden Smid 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 Walden Smid with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walden Smid and American Beacon.
Diversification Opportunities for Walden Smid and American Beacon
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Walden and American is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Walden Smid Cap and American Beacon Stephens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Stephens and Walden Smid 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 Walden Smid Cap 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 Stephens has no effect on the direction of Walden Smid i.e., Walden Smid and American Beacon go up and down completely randomly.
Pair Corralation between Walden Smid and American Beacon
Assuming the 90 days horizon Walden Smid is expected to generate 1.29 times less return on investment than American Beacon. But when comparing it to its historical volatility, Walden Smid Cap is 1.05 times less risky than American Beacon. It trades about 0.06 of its potential returns per unit of risk. American Beacon Stephens is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,423 in American Beacon Stephens on August 24, 2024 and sell it today you would earn a total of 937.00 from holding American Beacon Stephens or generate 38.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walden Smid Cap vs. American Beacon Stephens
Performance |
| Timeline |
| Walden Smid Cap |
| American Beacon Stephens |
Walden Smid and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walden Smid and American Beacon
The main advantage of trading using opposite Walden Smid and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walden Smid 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.| Walden Smid vs. Walden Midcap Fund | Walden Smid vs. Calvert Small Cap | Walden Smid vs. Calvert International Equity | Walden Smid vs. Champlain Mid Cap |
| American Beacon vs. American Beacon Stephens | American Beacon vs. American Beacon Stephens | American Beacon vs. American Beacon Stephens | American Beacon vs. American Beacon Stephens |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Commodity Directory Find actively traded commodities issued by global exchanges |