Correlation Between Invesco Small and American Beacon

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

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

Diversification Opportunities for Invesco Small and American Beacon

0.97

Correlation Coefficient

Invesco Small  American Beacon

Almost no diversification

The 3 months correlation between Invesco and American is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Small 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 Invesco Small 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 Invesco Small 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 Invesco Small i.e., Invesco Small and American Beacon go up and down completely randomly.

Pair Corralation between Invesco Small and American Beacon

Assuming the 90 days horizon Invesco Small Cap is expected to generate 1.47 times more return on investment than American Beacon. However, Invesco Small is 1.47 times more volatile than American Beacon The. It trades about 0.17 of its potential returns per unit of risk. American Beacon The is currently generating about 0.22 per unit of risk. If you would invest  1,397  in Invesco Small Cap on May 3, 2025 and sell it today you would earn a total of  136.00  from holding Invesco Small Cap or generate 9.74% return on investment over 90 days.

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

Invesco Small Cap  vs.  American Beacon The

Invesco Small Cap

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Small Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Invesco Small may actually be approaching a critical reversion point that can send shares even higher in September 2025.

American Beacon

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Beacon The are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, American Beacon may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Invesco Small and American Beacon

The main advantage of trading using opposite Invesco Small and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Small 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 Invesco Small 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.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.