Correlation Between William Blair and American Beacon

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

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

Diversification Opportunities for William Blair and American Beacon

0.93

Correlation Coefficient

William Blair  American Beacon

Almost no diversification

The 3 months correlation between William and American is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding William Blair Small Mid and American Beacon Bridgeway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Bridgeway and William Blair 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 William Blair Small Mid 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 Bridgeway has no effect on the direction of William Blair i.e., William Blair and American Beacon go up and down completely randomly.

Pair Corralation between William Blair and American Beacon

Assuming the 90 days horizon William Blair Small Mid is expected to under-perform the American Beacon. But the mutual fund apears to be less risky and, when comparing its historical volatility, William Blair Small Mid is 1.06 times less risky than American Beacon. The mutual fund trades about -0.19 of its potential returns per unit of risk. The American Beacon Bridgeway is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  2,823  in American Beacon Bridgeway on December 1, 2024 and sell it today you would lose (462.00) from holding American Beacon Bridgeway or give up 16.37% of portfolio value over 90 days.

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

William Blair Small Mid  vs.  American Beacon Bridgeway

William Blair Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days William Blair Small Mid has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

American Beacon Bridgeway

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Beacon Bridgeway has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with William Blair and American Beacon

The main advantage of trading using opposite William Blair and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if William Blair 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 William Blair Small Mid and American Beacon Bridgeway 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.