Correlation Between Invesco European and American Beacon

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

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

Diversification Opportunities for Invesco European and American Beacon

-0.74

Correlation Coefficient

Invesco European  American Beacon

Pay attention - limited upside

The 3 months correlation between Invesco and American is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Invesco European Growth and American Beacon The in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon and Invesco European 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 Invesco European Growth 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 has no effect on the direction of Invesco European i.e., Invesco European and American Beacon go up and down completely randomly.

Pair Corralation between Invesco European and American Beacon

Assuming the 90 days horizon Invesco European Growth is expected to under-perform the American Beacon. In addition to that, Invesco European is 1.5 times more volatile than American Beacon The. It trades about -0.16 of its total potential returns per unit of risk. American Beacon The is currently generating about 0.18 per unit of volatility. If you would invest  2,312  in American Beacon The on August 31, 2024 and sell it today you would earn a total of  143.00  from holding American Beacon The or generate 6.19% return on investment over 90 days.

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

Invesco European Growth  vs.  American Beacon The

Invesco European Growth

Risk-Adjusted Performance

0 of 100

Very Weak

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

American Beacon

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Beacon The are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, American Beacon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Invesco European and American Beacon

The main advantage of trading using opposite Invesco European and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco European 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.

The idea behind Invesco European Growth and American Beacon The 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.