Correlation Between American Beacon and Ab Large

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

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

Diversification Opportunities for American Beacon and Ab Large

0.15

Correlation Coefficient

American Beacon  Ab Large

Average diversification

The 3 months correlation between American and ALCKX is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon International and Ab Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Large Cap 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 International are associated (or correlated) with Ab Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Large Cap has no effect on the direction of American Beacon i.e., American Beacon and Ab Large go up and down completely randomly.

Pair Corralation between American Beacon and Ab Large

Assuming the 90 days horizon American Beacon International is expected to under-perform the Ab Large. In addition to that, American Beacon is 2.15 times more volatile than Ab Large Cap. It trades about -0.25 of its total potential returns per unit of risk. Ab Large Cap is currently generating about -0.15 per unit of volatility. If you would invest  10,566  in Ab Large Cap on September 29, 2024 and sell it today you would lose (634.00) from holding Ab Large Cap or give up 6.0% of portfolio value over 90 days.

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

American Beacon International  vs.  Ab Large Cap

American Beacon Inte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Beacon International 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 January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Ab Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking signals, Ab Large 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 Ab Large

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

The idea behind American Beacon International and Ab Large Cap 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.