Correlation Between Disciplined Growth and American Beacon
Can any of the company-specific risk be diversified away by investing in both Disciplined Growth 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 Disciplined Growth and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Disciplined Growth Fund and American Beacon International, you can compare the effects of market volatilities on Disciplined Growth 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 Disciplined Growth with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disciplined Growth and American Beacon.
Diversification Opportunities for Disciplined Growth and American Beacon
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Disciplined and American is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Disciplined Growth Fund and American Beacon International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Inte and Disciplined Growth 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 Disciplined Growth Fund 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 Inte has no effect on the direction of Disciplined Growth i.e., Disciplined Growth and American Beacon go up and down completely randomly.
Pair Corralation between Disciplined Growth and American Beacon
Assuming the 90 days horizon Disciplined Growth Fund is expected to generate 1.28 times more return on investment than American Beacon. However, Disciplined Growth is 1.28 times more volatile than American Beacon International. It trades about 0.08 of its potential returns per unit of risk. American Beacon International is currently generating about -0.19 per unit of risk. If you would invest 2,503 in Disciplined Growth Fund on August 30, 2024 and sell it today you would earn a total of 49.00 from holding Disciplined Growth Fund or generate 1.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Disciplined Growth Fund vs. American Beacon International
Performance |
| Timeline |
| Disciplined Growth |
| American Beacon Inte |
Disciplined Growth and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disciplined Growth and American Beacon
The main advantage of trading using opposite Disciplined Growth and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disciplined Growth 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.| Disciplined Growth vs. Nasdaq 100 Fund Class | Disciplined Growth vs. Nasdaq 100 Fund Class | Disciplined Growth vs. Aquagold International | Disciplined Growth vs. Morningstar Unconstrained Allocation |
| American Beacon vs. American Beacon International | American Beacon vs. American Beacon International | American Beacon vs. Disciplined Growth Fund | American Beacon vs. Real Estate Fund |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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