Correlation Between American Beacon and Ridgeworth Ceredex

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Can any of the company-specific risk be diversified away by investing in both American Beacon and Ridgeworth Ceredex 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 Ridgeworth Ceredex 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 Ridgeworth Ceredex Mid Cap, you can compare the effects of market volatilities on American Beacon and Ridgeworth Ceredex 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 Ridgeworth Ceredex. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Ridgeworth Ceredex.

Diversification Opportunities for American Beacon and Ridgeworth Ceredex

0.0
  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between American Beacon and Ridgeworth Ceredex

If you would invest (100.00) in American Beacon Mid Cap on January 20, 2024 and sell it today you would earn a total of  100.00  from holding American Beacon Mid Cap or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

American Beacon Mid Cap  vs.  Ridgeworth Ceredex Mid Cap

 Performance 
       Timeline  
American Beacon Mid 

Risk-Adjusted Performance

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Strong
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.
Ridgeworth Ceredex Mid 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Ridgeworth Ceredex Mid Cap are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ridgeworth Ceredex is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

American Beacon and Ridgeworth Ceredex Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Beacon and Ridgeworth Ceredex

The main advantage of trading using opposite American Beacon and Ridgeworth Ceredex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Ridgeworth Ceredex 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 Ridgeworth Ceredex will offset losses from the drop in Ridgeworth Ceredex's long position.
The idea behind American Beacon Mid Cap and Ridgeworth Ceredex Mid Cap 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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