Correlation Between American Beacon and The Tocqueville

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

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

Diversification Opportunities for American Beacon and The Tocqueville

-0.51

Correlation Coefficient

American Beacon  The Tocqueville

Excellent diversification

The 3 months correlation between American and THE is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Ssi and The Tocqueville International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tocqueville Inte and American Beacon 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 American Beacon Ssi are associated (or correlated) with The Tocqueville. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tocqueville Inte has no effect on the direction of American Beacon i.e., American Beacon and The Tocqueville go up and down completely randomly.

Pair Corralation between American Beacon and The Tocqueville

Assuming the 90 days horizon American Beacon Ssi is expected to generate 0.1 times more return on investment than The Tocqueville. However, American Beacon Ssi is 10.2 times less risky than The Tocqueville. It trades about 0.66 of its potential returns per unit of risk. The Tocqueville International is currently generating about -0.01 per unit of risk. If you would invest  974.00  in American Beacon Ssi on September 1, 2024 and sell it today you would earn a total of  28.00  from holding American Beacon Ssi or generate 2.87% return on investment over 90 days.

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

American Beacon Ssi  vs.  The Tocqueville International

American Beacon Ssi

Risk-Adjusted Performance

51 of 100

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in American Beacon Ssi are ranked lower than 51 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking indicators, American Beacon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tocqueville Inte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Tocqueville International has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, The Tocqueville is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with American Beacon and The Tocqueville

The main advantage of trading using opposite American Beacon and The Tocqueville positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, The Tocqueville 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 The Tocqueville will offset losses from the drop in The Tocqueville's long position.

The idea behind American Beacon Ssi and The Tocqueville 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.

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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.