Correlation Between American Beacon and Disciplined Growth
Can any of the company-specific risk be diversified away by investing in both American Beacon and Disciplined Growth 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 Disciplined Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Bridgeway and Disciplined Growth Fund, you can compare the effects of market volatilities on American Beacon and Disciplined Growth 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 Disciplined Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Disciplined Growth.
Diversification Opportunities for American Beacon and Disciplined Growth
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between American and Disciplined is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Bridgeway and Disciplined Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Disciplined Growth 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 Bridgeway are associated (or correlated) with Disciplined Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Disciplined Growth has no effect on the direction of American Beacon i.e., American Beacon and Disciplined Growth go up and down completely randomly.
Pair Corralation between American Beacon and Disciplined Growth
Assuming the 90 days horizon American Beacon is expected to generate 1.25 times less return on investment than Disciplined Growth. But when comparing it to its historical volatility, American Beacon Bridgeway is 1.0 times less risky than Disciplined Growth. It trades about 0.1 of its potential returns per unit of risk. Disciplined Growth Fund is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,450 in Disciplined Growth Fund on September 3, 2024 and sell it today you would earn a total of 1,122 from holding Disciplined Growth Fund or generate 77.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Bridgeway vs. Disciplined Growth Fund
Performance |
| Timeline |
| American Beacon Bridgeway |
| Disciplined Growth |
American Beacon and Disciplined Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Disciplined Growth
The main advantage of trading using opposite American Beacon and Disciplined Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Disciplined Growth 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 Disciplined Growth will offset losses from the drop in Disciplined Growth's long position.| American Beacon vs. American Beacon Bridgeway | American Beacon vs. Ab Centrated Growth | American Beacon vs. Disciplined Growth Fund | American Beacon vs. Select Fund R |
| Disciplined Growth vs. Select Fund C | Disciplined Growth vs. Select Fund R | Disciplined Growth vs. Invesco Disciplined Equity | Disciplined Growth vs. American Beacon Bridgeway |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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