Correlation Between American Beacon and William Blair

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

By analyzing existing cross correlation between American Beacon Intl and William Blair Small, you can compare the effects of market volatilities on American Beacon and William Blair 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 William Blair. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and William Blair.

Diversification Opportunities for American Beacon and William Blair

0.28

Correlation Coefficient

American Beacon  William Blair

Modest diversification

The 3 months correlation between American and William is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Intl and William Blair Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on William Blair Small 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 Intl are associated (or correlated) with William Blair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of William Blair Small has no effect on the direction of American Beacon i.e., American Beacon and William Blair go up and down completely randomly.

Pair Corralation between American Beacon and William Blair

Assuming the 90 days horizon American Beacon Intl is expected to under-perform the William Blair. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Beacon Intl is 1.02 times less risky than William Blair. The mutual fund trades about -0.01 of its potential returns per unit of risk. The William Blair Small is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,055  in William Blair Small on October 3, 2024 and sell it today you would lose (88.00) from holding William Blair Small or give up 2.88% of portfolio value over 90 days.

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

American Beacon Intl  vs.  William Blair Small

American Beacon Intl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Beacon Intl has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

William Blair Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days William Blair Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, William Blair 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 William Blair

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

The idea behind American Beacon Intl and William Blair Small 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.