Correlation Between American Beacon and Mirova Global

Can any of the company-specific risk be diversified away by investing in both American Beacon and Mirova Global 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 American Beacon and Mirova Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Beacon Large and Mirova Global Green, you can compare the effects of market volatilities on American Beacon and Mirova Global 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 American Beacon with a short position of Mirova Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Mirova Global.

Diversification Opportunities for American Beacon and Mirova Global

0.65

Correlation Coefficient

American Beacon  Mirova Global

Poor diversification

The 3 months correlation between American and Mirova is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Large and Mirova Global Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirova Global Green and American Beacon 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 American Beacon Large are associated (or correlated) with Mirova Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirova Global Green has no effect on the direction of American Beacon i.e., American Beacon and Mirova Global go up and down completely randomly.

Pair Corralation between American Beacon and Mirova Global

Assuming the 90 days horizon American Beacon Large is expected to generate 2.72 times more return on investment than Mirova Global. However, American Beacon is 2.72 times more volatile than Mirova Global Green. It trades about 0.05 of its potential returns per unit of risk. Mirova Global Green is currently generating about 0.07 per unit of risk. If you would invest  2,223  in American Beacon Large on December 2, 2024 and sell it today you would earn a total of  529.00  from holding American Beacon Large or generate 23.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

American Beacon Large  vs.  Mirova Global Green

American Beacon Large

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Beacon Large has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Mirova Global Green

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mirova Global Green has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Mirova Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with American Beacon and Mirova Global

The main advantage of trading using opposite American Beacon and Mirova Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Mirova Global 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 Mirova Global will offset losses from the drop in Mirova Global's long position.

The idea behind American Beacon Large and Mirova Global Green pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.