Correlation Between Managed Volatility and American Beacon
Can any of the company-specific risk be diversified away by investing in both Managed Volatility 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 Managed Volatility and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Managed Volatility Fund and American Beacon Bridgeway, you can compare the effects of market volatilities on Managed Volatility 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 Managed Volatility with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Managed Volatility and American Beacon.
Diversification Opportunities for Managed Volatility and American Beacon
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Managed and American is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Managed Volatility 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 Managed Volatility 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 Managed Volatility 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 Managed Volatility i.e., Managed Volatility and American Beacon go up and down completely randomly.
Pair Corralation between Managed Volatility and American Beacon
Assuming the 90 days horizon Managed Volatility is expected to generate 30.9 times less return on investment than American Beacon. But when comparing it to its historical volatility, Managed Volatility Fund is 39.0 times less risky than American Beacon. It trades about 0.31 of its potential returns per unit of risk. American Beacon Bridgeway is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 2,732 in American Beacon Bridgeway on August 28, 2024 and sell it today you would earn a total of 157.00 from holding American Beacon Bridgeway or generate 5.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Managed Volatility Fund vs. American Beacon Bridgeway
Performance |
| Timeline |
| Managed Volatility |
| American Beacon Bridgeway |
Managed Volatility and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Managed Volatility and American Beacon
The main advantage of trading using opposite Managed Volatility and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Managed Volatility 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.| Managed Volatility vs. Lifestyle Ii Moderate | Managed Volatility vs. Dimensional Retirement Income | Managed Volatility vs. Qs Moderate Growth | Managed Volatility vs. Hartford Moderate Allocation |
| American Beacon vs. American Beacon Bridgeway | American Beacon vs. Small Cap Value Fund | American Beacon vs. Managed Volatility Fund | American Beacon vs. Ultra Small Pany Market |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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