Correlation Between American Beacon and Saat Market

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

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

Diversification Opportunities for American Beacon and Saat Market

0.89

Correlation Coefficient

American Beacon  Saat Market

Very poor diversification

The 3 months correlation between AMERICAN and Saat is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Bridgeway and Saat Market Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saat Market Growth 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 Bridgeway are associated (or correlated) with Saat Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saat Market Growth has no effect on the direction of American Beacon i.e., American Beacon and Saat Market go up and down completely randomly.

Pair Corralation between American Beacon and Saat Market

Assuming the 90 days horizon American Beacon Bridgeway is expected to under-perform the Saat Market. In addition to that, American Beacon is 3.34 times more volatile than Saat Market Growth. It trades about -0.28 of its total potential returns per unit of risk. Saat Market Growth is currently generating about -0.3 per unit of volatility. If you would invest  1,304  in Saat Market Growth on October 11, 2024 and sell it today you would lose (73.00) from holding Saat Market Growth or give up 5.6% of portfolio value over 90 days.

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

American Beacon Bridgeway  vs.  Saat Market Growth

American Beacon Bridgeway

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Beacon Bridgeway 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 fundamental 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.

Saat Market Growth

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind American Beacon Bridgeway and Saat Market Growth 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.