Correlation Between Chartwell Short and American Beacon

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

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

Diversification Opportunities for Chartwell Short and American Beacon

0.81

Correlation Coefficient

Chartwell Short  American Beacon

Very poor diversification

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

Pair Corralation between Chartwell Short and American Beacon

Assuming the 90 days horizon Chartwell Short Duration is expected to generate 1.38 times more return on investment than American Beacon. However, Chartwell Short is 1.38 times more volatile than American Beacon Twentyfour. It trades about 0.14 of its potential returns per unit of risk. American Beacon Twentyfour is currently generating about 0.17 per unit of risk. If you would invest  943.00  in Chartwell Short Duration on October 24, 2024 and sell it today you would earn a total of  11.00  from holding Chartwell Short Duration or generate 1.17% return on investment over 90 days.

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

Chartwell Short Duration  vs.  American Beacon Twentyfour

Chartwell Short Duration

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chartwell Short Duration are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Chartwell Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

American Beacon Twen

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Beacon Twentyfour are ranked lower than 12 (%) 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 Chartwell Short and American Beacon

The main advantage of trading using opposite Chartwell Short and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chartwell Short 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 Chartwell Short Duration and American Beacon Twentyfour 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.