Correlation Between Johcm Emerging and American Beacon

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

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

Diversification Opportunities for Johcm Emerging and American Beacon

-0.27

Correlation Coefficient

Johcm Emerging  American Beacon

Very good diversification

The 3 months correlation between Johcm and American is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Johcm Emerging Markets 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 Johcm Emerging 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 Johcm Emerging Markets 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 Johcm Emerging i.e., Johcm Emerging and American Beacon go up and down completely randomly.

Pair Corralation between Johcm Emerging and American Beacon

Assuming the 90 days horizon Johcm Emerging Markets is expected to generate 0.88 times more return on investment than American Beacon. However, Johcm Emerging Markets is 1.14 times less risky than American Beacon. It trades about 0.09 of its potential returns per unit of risk. American Beacon Stephens is currently generating about -0.09 per unit of risk. If you would invest  1,140  in Johcm Emerging Markets on December 29, 2024 and sell it today you would earn a total of  72.00  from holding Johcm Emerging Markets or generate 6.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Johcm Emerging Markets  vs.  American Beacon Stephens

Johcm Emerging Markets

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Johcm Emerging Markets are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Johcm Emerging may actually be approaching a critical reversion point that can send shares even higher in April 2025.

American Beacon Stephens

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Beacon Stephens has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Johcm Emerging and American Beacon

The main advantage of trading using opposite Johcm Emerging and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johcm Emerging 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 Johcm Emerging Markets 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.