Correlation Between Midas Fund and American Beacon

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

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

Diversification Opportunities for Midas Fund and American Beacon

-0.2

Correlation Coefficient

Midas Fund  American Beacon

Good diversification

The 3 months correlation between Midas and American is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Midas Fund Midas 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 Midas Fund 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 Midas Fund Midas 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 Midas Fund i.e., Midas Fund and American Beacon go up and down completely randomly.

Pair Corralation between Midas Fund and American Beacon

Assuming the 90 days horizon Midas Fund Midas is expected to under-perform the American Beacon. In addition to that, Midas Fund is 21.37 times more volatile than American Beacon Twentyfour. It trades about -0.04 of its total potential returns per unit of risk. American Beacon Twentyfour is currently generating about 0.12 per unit of volatility. If you would invest  861.00  in American Beacon Twentyfour on September 16, 2024 and sell it today you would earn a total of  6.00  from holding American Beacon Twentyfour or generate 0.7% return on investment over 90 days.

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

Midas Fund Midas  vs.  American Beacon Twentyfour

Midas Fund Midas

Risk-Adjusted Performance

0 of 100

Very Weak

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

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Beacon Twentyfour are ranked lower than 9 (%) 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 Midas Fund and American Beacon

The main advantage of trading using opposite Midas Fund and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Midas Fund 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 Midas Fund Midas 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.