Correlation Between American Beacon and Managed Volatility

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Can any of the company-specific risk be diversified away by investing in both American Beacon and Managed Volatility 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 Managed Volatility 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 Managed Volatility Fund, you can compare the effects of market volatilities on American Beacon and Managed Volatility 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 Managed Volatility. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Managed Volatility.

Diversification Opportunities for American Beacon and Managed Volatility

-0.21
  Correlation Coefficient

Very good diversification

The 3 months correlation between American and Managed is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Bridgeway and Managed Volatility Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Managed Volatility 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 Managed Volatility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Managed Volatility has no effect on the direction of American Beacon i.e., American Beacon and Managed Volatility go up and down completely randomly.

Pair Corralation between American Beacon and Managed Volatility

Assuming the 90 days horizon American Beacon Bridgeway is expected to generate 0.46 times more return on investment than Managed Volatility. However, American Beacon Bridgeway is 2.19 times less risky than Managed Volatility. It trades about 0.14 of its potential returns per unit of risk. Managed Volatility Fund is currently generating about -0.04 per unit of risk. If you would invest  2,628  in American Beacon Bridgeway on August 25, 2024 and sell it today you would earn a total of  1,162  from holding American Beacon Bridgeway or generate 44.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.63%
ValuesDaily Returns

American Beacon Bridgeway  vs.  Managed Volatility Fund

 Performance 
       Timeline  
American Beacon Bridgeway 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in American Beacon Bridgeway are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, American Beacon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Managed Volatility 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Managed Volatility Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the fund investors.

American Beacon and Managed Volatility Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Beacon and Managed Volatility

The main advantage of trading using opposite American Beacon and Managed Volatility positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Managed Volatility 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 Managed Volatility will offset losses from the drop in Managed Volatility's long position.
The idea behind American Beacon Bridgeway and Managed Volatility Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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