Correlation Between Allianzgi Diversified and American Beacon
Can any of the company-specific risk be diversified away by investing in both Allianzgi Diversified 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 Allianzgi Diversified and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allianzgi Diversified Income and American Beacon Ark, you can compare the effects of market volatilities on Allianzgi Diversified 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 Allianzgi Diversified with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allianzgi Diversified and American Beacon.
Diversification Opportunities for Allianzgi Diversified and American Beacon
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Allianzgi and American is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Allianzgi Diversified Income and American Beacon Ark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Ark and Allianzgi Diversified 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 Allianzgi Diversified Income 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 Ark has no effect on the direction of Allianzgi Diversified i.e., Allianzgi Diversified and American Beacon go up and down completely randomly.
Pair Corralation between Allianzgi Diversified and American Beacon
Assuming the 90 days horizon Allianzgi Diversified is expected to generate 3.41 times less return on investment than American Beacon. But when comparing it to its historical volatility, Allianzgi Diversified Income is 2.72 times less risky than American Beacon. It trades about 0.06 of its potential returns per unit of risk. American Beacon Ark is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,285 in American Beacon Ark on November 7, 2024 and sell it today you would earn a total of 399.00 from holding American Beacon Ark or generate 31.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allianzgi Diversified Income vs. American Beacon Ark
Performance |
| Timeline |
| Allianzgi Diversified |
| American Beacon Ark |
Allianzgi Diversified and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allianzgi Diversified and American Beacon
The main advantage of trading using opposite Allianzgi Diversified and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allianzgi Diversified 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.| Allianzgi Diversified vs. Vanguard Total Stock | Allianzgi Diversified vs. Vanguard 500 Index | Allianzgi Diversified vs. Vanguard Total Stock | Allianzgi Diversified vs. Vanguard Total Stock |
| American Beacon vs. Ultra Short Fixed Income | American Beacon vs. Qs Global Equity | American Beacon vs. Aqr Long Short Equity | American Beacon vs. Calvert International Equity |
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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