Correlation Between AllianzIM Large and American Beacon

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

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

Diversification Opportunities for AllianzIM Large and American Beacon

0.77

Correlation Coefficient

AllianzIM Large  American Beacon

Poor diversification

The 3 months correlation between AllianzIM and American is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding AllianzIM Large Cap and American Beacon The in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon and AllianzIM Large 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 AllianzIM Large Cap 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 has no effect on the direction of AllianzIM Large i.e., AllianzIM Large and American Beacon go up and down completely randomly.

Pair Corralation between AllianzIM Large and American Beacon

Given the investment horizon of 90 days AllianzIM Large Cap is expected to generate 0.42 times more return on investment than American Beacon. However, AllianzIM Large Cap is 2.36 times less risky than American Beacon. It trades about 0.11 of its potential returns per unit of risk. American Beacon The is currently generating about 0.0 per unit of risk. If you would invest  2,713  in AllianzIM Large Cap on January 24, 2024 and sell it today you would earn a total of  653.00  from holding AllianzIM Large Cap or generate 24.07% return on investment over 90 days.

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

AllianzIM Large Cap  vs.  American Beacon The

AllianzIM Large Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AllianzIM Large Cap are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, AllianzIM Large is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

American Beacon

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in American Beacon The are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, American Beacon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AllianzIM Large and American Beacon

The main advantage of trading using opposite AllianzIM Large and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AllianzIM Large 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 AllianzIM Large Cap and American Beacon The 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.