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 Bridgeway, 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
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Disciplined and American is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Disciplined Growth Fund and American Beacon Bridgeway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Bridgeway 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 Bridgeway 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 0.98 times more return on investment than American Beacon. However, Disciplined Growth Fund is 1.03 times less risky than American Beacon. It trades about 0.29 of its potential returns per unit of risk. American Beacon Bridgeway is currently generating about 0.27 per unit of risk. If you would invest 2,426 in Disciplined Growth Fund on September 1, 2024 and sell it today you would earn a total of 146.00 from holding Disciplined Growth Fund or generate 6.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Disciplined Growth Fund vs. American Beacon Bridgeway
Performance |
| Timeline |
| Disciplined Growth |
| American Beacon Bridgeway |
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. Select Fund C | Disciplined Growth vs. Select Fund R | Disciplined Growth vs. Invesco Disciplined Equity | Disciplined Growth vs. American Beacon Bridgeway |
| American Beacon vs. American Beacon Ssi | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Twentyfour |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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