Correlation Between Dodge Stock and American Beacon
Can any of the company-specific risk be diversified away by investing in both Dodge Stock 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 Dodge Stock and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dodge Stock Fund and American Beacon Twentyfour, you can compare the effects of market volatilities on Dodge Stock 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 Dodge Stock with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Stock and American Beacon.
Diversification Opportunities for Dodge Stock and American Beacon
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dodge and American is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Stock Fund and American Beacon Twentyfour in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Twen and Dodge Stock 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 Dodge Stock 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 Twen has no effect on the direction of Dodge Stock i.e., Dodge Stock and American Beacon go up and down completely randomly.
Pair Corralation between Dodge Stock and American Beacon
Assuming the 90 days horizon Dodge Stock Fund is expected to under-perform the American Beacon. In addition to that, Dodge Stock is 5.32 times more volatile than American Beacon Twentyfour. It trades about -0.19 of its total potential returns per unit of risk. American Beacon Twentyfour is currently generating about 0.2 per unit of volatility. If you would invest 864.00 in American Beacon Twentyfour on September 15, 2024 and sell it today you would earn a total of 3.00 from holding American Beacon Twentyfour or generate 0.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge Stock Fund vs. American Beacon Twentyfour
Performance |
| Timeline |
| Dodge Stock Fund |
| American Beacon Twen |
Dodge Stock and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Stock and American Beacon
The main advantage of trading using opposite Dodge Stock and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Stock 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.| Dodge Stock vs. Dodge International Stock | Dodge Stock vs. Dodge Balanced Fund | Dodge Stock vs. Dodge Income Fund | Dodge Stock vs. Total Return Fund |
| American Beacon vs. Cutler Equity | American Beacon vs. Ms Global Fixed | American Beacon vs. Us Strategic Equity | American Beacon vs. Balanced Fund Retail |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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