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 Diversified and American Beacon Twentyfour, 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
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and American is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and American Beacon Twentyfour in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Twen 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 Diversified 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 Twen 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 2.54 times less return on investment than American Beacon. In addition to that, Western Asset is 3.78 times more volatile than American Beacon Twentyfour. It trades about 0.03 of its total potential returns per unit of risk. American Beacon Twentyfour is currently generating about 0.25 per unit of volatility. If you would invest 779.00 in American Beacon Twentyfour on September 12, 2024 and sell it today you would earn a total of 96.00 from holding American Beacon Twentyfour or generate 12.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. American Beacon Twentyfour
Performance |
| Timeline |
| Western Asset Diversified |
| American Beacon Twen |
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. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
| American Beacon vs. Putnam Convertible Incm Gwth | American Beacon vs. Gabelli Convertible And | American Beacon vs. Calamos Dynamic Convertible | American Beacon vs. Absolute Convertible Arbitrage |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |