Correlation Between American Beacon and Ab Discovery

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Can any of the company-specific risk be diversified away by investing in both American Beacon and Ab Discovery 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 Ab Discovery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Mid Cap and Ab Discovery Value, you can compare the effects of market volatilities on American Beacon and Ab Discovery 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 Ab Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Ab Discovery.

Diversification Opportunities for American Beacon and Ab Discovery

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between American and ABSIX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AMERICAN BEACON MID-CAP and AB DISCOVERY VALUE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Discovery Value 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 Mid Cap are associated (or correlated) with Ab Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Discovery Value has no effect on the direction of American Beacon i.e., American Beacon and Ab Discovery go up and down completely randomly.

Pair Corralation between American Beacon and Ab Discovery

If you would invest  2,145  in Ab Discovery Value on December 29, 2023 and sell it today you would earn a total of  120.00  from holding Ab Discovery Value or generate 5.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

AMERICAN BEACON MID-CAP  vs.  AB DISCOVERY VALUE

 Performance 
       Timeline  
American Beacon Mid-cap 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days American Beacon Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. 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.
Ab Discovery Value 

Risk-Adjusted Performance

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OK
Compared to the overall equity markets, risk-adjusted returns on investments in Ab Discovery Value are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly fragile forward indicators, Ab Discovery may actually be approaching a critical reversion point that can send shares even higher in April 2024.

American Beacon and Ab Discovery Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Beacon and Ab Discovery

The main advantage of trading using opposite American Beacon and Ab Discovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Ab Discovery 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 Ab Discovery will offset losses from the drop in Ab Discovery's long position.
The idea behind American Beacon Mid Cap and Ab Discovery Value 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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