Correlation Between Global Diversified and American Beacon
Can any of the company-specific risk be diversified away by investing in both Global 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 Global 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 Global Diversified Income and American Beacon Small, you can compare the effects of market volatilities on Global 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 Global Diversified with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Diversified and American Beacon.
Diversification Opportunities for Global Diversified and American Beacon
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and American is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Global Diversified Income and American Beacon Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Small and Global 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 Global 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 Small has no effect on the direction of Global Diversified i.e., Global Diversified and American Beacon go up and down completely randomly.
Pair Corralation between Global Diversified and American Beacon
Assuming the 90 days horizon Global Diversified is expected to generate 1.13 times less return on investment than American Beacon. But when comparing it to its historical volatility, Global Diversified Income is 8.85 times less risky than American Beacon. It trades about 0.11 of its potential returns per unit of risk. American Beacon Small is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,109 in American Beacon Small on March 27, 2025 and sell it today you would earn a total of 10.00 from holding American Beacon Small or generate 0.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.39% |
| Values | Daily Returns |
Global Diversified Income vs. American Beacon Small
Performance |
| Timeline |
| Global Diversified Income |
| American Beacon Small |
Global Diversified and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Diversified and American Beacon
The main advantage of trading using opposite Global Diversified and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global 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.| Global Diversified vs. Transamerica International Small | Global Diversified vs. Jhvit International Small | Global Diversified vs. Artisan Small Cap | Global Diversified vs. Champlain Small |
| American Beacon vs. Lord Abbett Diversified | American Beacon vs. Doubleline Emerging Markets | American Beacon vs. Transamerica Emerging Markets | American Beacon vs. Gmo Emerging Markets |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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