Correlation Between American Beacon and Horizon Kinetics

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

By analyzing existing cross correlation between American Beacon GLG and Horizon Kinetics Medical, you can compare the effects of market volatilities on American Beacon and Horizon Kinetics 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 Horizon Kinetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Horizon Kinetics.

Diversification Opportunities for American Beacon and Horizon Kinetics

0.0

Correlation Coefficient

American Beacon  Horizon Kinetics

Pay attention - limited upside

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

Pair Corralation between American Beacon and Horizon Kinetics

If you would invest  2,630  in American Beacon GLG on March 12, 2024 and sell it today you would earn a total of  373.00  from holding American Beacon GLG or generate 14.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

American Beacon GLG  vs.  Horizon Kinetics Medical

American Beacon GLG

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Beacon GLG are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, American Beacon reported solid returns over the last few months and may actually be approaching a breakup point.

Horizon Kinetics Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Horizon Kinetics Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Horizon Kinetics 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 Horizon Kinetics

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

The idea behind American Beacon GLG and Horizon Kinetics Medical 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.