Correlation Between Simt Mid and American Beacon

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

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

Diversification Opportunities for Simt Mid and American Beacon

0.93

Correlation Coefficient

Simt Mid  American Beacon

Almost no diversification

The 3 months correlation between Simt and American is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Simt Mid Cap 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 Simt Mid 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 Simt Mid 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 Shapiro has no effect on the direction of Simt Mid i.e., Simt Mid and American Beacon go up and down completely randomly.

Pair Corralation between Simt Mid and American Beacon

Assuming the 90 days horizon Simt Mid Cap is expected to generate about the same return on investment as American Beacon Shapiro. But, Simt Mid Cap is 1.27 times less risky than American Beacon. It trades about 0.06 of its potential returns per unit of risk. American Beacon Shapiro is currently generating about 0.04 per unit of risk. If you would invest  1,514  in American Beacon Shapiro on August 12, 2025 and sell it today you would earn a total of  37.00  from holding American Beacon Shapiro or generate 2.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.46%
Values	Daily Returns

Simt Mid Cap  vs.  American Beacon Shapiro

Simt Mid Cap

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Mid Cap are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Simt Mid 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

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in American Beacon Shapiro are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. 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 Simt Mid and American Beacon

The main advantage of trading using opposite Simt Mid and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simt Mid 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 Simt Mid Cap 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.