Correlation Between American Beacon and Growth Fund
Can any of the company-specific risk be diversified away by investing in both American Beacon and Growth Fund 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 American Beacon and Growth Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Large and Growth Fund Of, you can compare the effects of market volatilities on American Beacon and Growth Fund 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 American Beacon with a short position of Growth Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Growth Fund.
Diversification Opportunities for American Beacon and Growth Fund
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Growth is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Large and Growth Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund and American Beacon 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 American Beacon Large are associated (or correlated) with Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund has no effect on the direction of American Beacon i.e., American Beacon and Growth Fund go up and down completely randomly.
Pair Corralation between American Beacon and Growth Fund
Assuming the 90 days horizon American Beacon Large is expected to generate 0.65 times more return on investment than Growth Fund. However, American Beacon Large is 1.53 times less risky than Growth Fund. It trades about -0.05 of its potential returns per unit of risk. Growth Fund Of is currently generating about -0.13 per unit of risk. If you would invest 2,358 in American Beacon Large on November 28, 2024 and sell it today you would lose (15.00) from holding American Beacon Large or give up 0.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Large vs. Growth Fund Of
Performance |
| Timeline |
| American Beacon Large |
| Growth Fund |
American Beacon and Growth Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Growth Fund
The main advantage of trading using opposite American Beacon and Growth Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Growth Fund 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 Growth Fund will offset losses from the drop in Growth Fund's long position.| American Beacon vs. Northern Small Cap | American Beacon vs. Ssga International Stock | American Beacon vs. American Beacon International | American Beacon vs. Perkins Mid Cap |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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