Correlation Between Utilities Fund and American Beacon

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

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

Diversification Opportunities for Utilities Fund and American Beacon

-0.64

Correlation Coefficient

Utilities Fund  American Beacon

Excellent diversification

The 3 months correlation between Utilities and American is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Utilities Fund Investor and American Beacon Shapiro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Shapiro and Utilities Fund 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 Utilities Fund Investor 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 Shapiro has no effect on the direction of Utilities Fund i.e., Utilities Fund and American Beacon go up and down completely randomly.

Pair Corralation between Utilities Fund and American Beacon

Assuming the 90 days horizon Utilities Fund Investor is expected to generate 0.63 times more return on investment than American Beacon. However, Utilities Fund Investor is 1.58 times less risky than American Beacon. It trades about 0.12 of its potential returns per unit of risk. American Beacon Shapiro is currently generating about -0.07 per unit of risk. If you would invest  6,511  in Utilities Fund Investor on August 18, 2025 and sell it today you would earn a total of  358.00  from holding Utilities Fund Investor or generate 5.5% return on investment over 90 days.

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

Utilities Fund Investor  vs.  American Beacon Shapiro

Utilities Fund Investor

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Utilities Fund Investor are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Utilities Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

American Beacon Shapiro

Risk-Adjusted Performance

Weakest

Over the last 90 days American Beacon Shapiro 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.

Pair Trading with Utilities Fund and American Beacon

The main advantage of trading using opposite Utilities Fund and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Utilities Fund 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 Utilities Fund Investor and American Beacon Shapiro 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.