Correlation Between Global X and American Beacon

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

Diversification Opportunities for Global X and American Beacon

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Global and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Global X Lithium and AMERICAN BEACON MID-CAP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Mid-cap and Global X 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 Global X Lithium 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 Mid-cap has no effect on the direction of Global X i.e., Global X and American Beacon go up and down completely randomly.

Pair Corralation between Global X and American Beacon

If you would invest  4,425  in Global X Lithium on December 29, 2023 and sell it today you would earn a total of  115.00  from holding Global X Lithium or generate 2.6% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Global X Lithium  vs.  AMERICAN BEACON MID-CAP

 Performance 
       Timeline  
Global X Lithium 

Risk-Adjusted Performance

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Over the last 90 days Global X Lithium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's forward indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.
American Beacon Mid-cap 

Risk-Adjusted Performance

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Low
 
High
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.

Global X and American Beacon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Global X and American Beacon

The main advantage of trading using opposite Global X and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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 Global X Lithium and American Beacon 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.
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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