Correlation Between Invesco Gold and American Beacon

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Can any of the company-specific risk be diversified away by investing in both Invesco Gold 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 Gold 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 Gold Special and American Beacon Stephens, you can compare the effects of market volatilities on Invesco Gold 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 Gold with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Gold and American Beacon.

Diversification Opportunities for Invesco Gold and American Beacon

InvescoAmericanDiversified AwayInvescoAmericanDiversified Away100%
0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between Invesco and American is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Gold Special and American Beacon Stephens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Stephens and Invesco Gold 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 Gold Special 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 Stephens has no effect on the direction of Invesco Gold i.e., Invesco Gold and American Beacon go up and down completely randomly.

Pair Corralation between Invesco Gold and American Beacon

Assuming the 90 days horizon Invesco Gold Special is expected to under-perform the American Beacon. In addition to that, Invesco Gold is 1.66 times more volatile than American Beacon Stephens. It trades about -0.07 of its total potential returns per unit of risk. American Beacon Stephens is currently generating about 0.08 per unit of volatility. If you would invest  3,847  in American Beacon Stephens on October 25, 2024 and sell it today you would earn a total of  199.00  from holding American Beacon Stephens or generate 5.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Invesco Gold Special  vs.  American Beacon Stephens

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -10-505
JavaScript chart by amCharts 3.21.15IOGYX SFMRX
       Timeline  
Invesco Gold Special 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Invesco Gold Special 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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan262728293031
American Beacon Stephens 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in American Beacon Stephens are ranked lower than 6 (%) 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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan383940414243

Invesco Gold and American Beacon Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.89-2.17-1.44-0.71-0.01180.671.382.082.793.49 0.050.100.150.200.250.30
JavaScript chart by amCharts 3.21.15IOGYX SFMRX
       Returns  

Pair Trading with Invesco Gold and American Beacon

The main advantage of trading using opposite Invesco Gold and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Gold 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 Gold Special and American Beacon Stephens 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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