Correlation Between Voya Intermediate and American Beacon

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

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

Diversification Opportunities for Voya Intermediate and American Beacon

0.91

Correlation Coefficient

Voya Intermediate  American Beacon

Almost no diversification

The 3 months correlation between Voya and American is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Voya Intermediate Bond 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 Voya Intermediate 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 Voya Intermediate Bond 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 Voya Intermediate i.e., Voya Intermediate and American Beacon go up and down completely randomly.

Pair Corralation between Voya Intermediate and American Beacon

Assuming the 90 days horizon Voya Intermediate is expected to generate 4.34 times less return on investment than American Beacon. But when comparing it to its historical volatility, Voya Intermediate Bond is 3.02 times less risky than American Beacon. It trades about 0.13 of its potential returns per unit of risk. American Beacon International is currently generating about 0.19 of returns per unit of risk over similar time horizon. 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	100.0%
Values	Daily Returns

Voya Intermediate Bond  vs.  American Beacon International

Voya Intermediate Bond

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Intermediate Bond are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Voya Intermediate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Voya Intermediate and American Beacon

The main advantage of trading using opposite Voya Intermediate and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Intermediate 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 Voya Intermediate Bond 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.