Correlation Between American Beacon and Ab Bond

Can any of the company-specific risk be diversified away by investing in both American Beacon and Ab Bond 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 Bond 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 Bond Inflation, you can compare the effects of market volatilities on American Beacon and Ab Bond 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 Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Ab Bond.

Diversification Opportunities for American Beacon and Ab Bond

0.94

Correlation Coefficient

American Beacon  Ab Bond

Almost no diversification

The 3 months correlation between American and ABNCX is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon International and Ab Bond Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Bond Inflation 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 Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Bond Inflation has no effect on the direction of American Beacon i.e., American Beacon and Ab Bond go up and down completely randomly.

Pair Corralation between American Beacon and Ab Bond

Assuming the 90 days horizon American Beacon International is expected to generate 5.06 times more return on investment than Ab Bond. However, American Beacon is 5.06 times more volatile than Ab Bond Inflation. It trades about 0.19 of its potential returns per unit of risk. Ab Bond Inflation is currently generating about 0.3 per unit of risk. If you would invest  1,593  in American Beacon International on December 29, 2024 and sell it today you would earn a total of  184.00  from holding American Beacon International or generate 11.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

American Beacon International  vs.  Ab Bond Inflation

American Beacon Inte

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Beacon International are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, American Beacon may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Ab Bond Inflation

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Bond Inflation are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Ab Bond 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 Bond

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

The idea behind American Beacon International and Ab Bond Inflation 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.