Correlation Between Aquagold International and American Beacon

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

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

Diversification Opportunities for Aquagold International and American Beacon

0.81

Correlation Coefficient

Aquagold International  American Beacon

Very poor diversification

The 3 months correlation between Aquagold and American is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and American Beacon International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Inte and Aquagold International 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 Aquagold International 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 Inte has no effect on the direction of Aquagold International i.e., Aquagold International and American Beacon go up and down completely randomly.

Pair Corralation between Aquagold International and American Beacon

Given the investment horizon of 90 days Aquagold International is expected to under-perform the American Beacon. In addition to that, Aquagold International is 5.36 times more volatile than American Beacon International. It trades about -0.06 of its total potential returns per unit of risk. American Beacon International is currently generating about -0.02 per unit of volatility. If you would invest  1,649  in American Beacon International on October 5, 2024 and sell it today you would lose (184.00) from holding American Beacon International or give up 11.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.68%
Values	Daily Returns

Aquagold International  vs.  American Beacon International

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Aquagold International and American Beacon

The main advantage of trading using opposite Aquagold International and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquagold International 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 Aquagold International and American Beacon International 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.