Correlation Between Growth Fund and American Beacon
Can any of the company-specific risk be diversified away by investing in both Growth Fund 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 Growth Fund and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund Of and American Beacon Bridgeway, you can compare the effects of market volatilities on Growth Fund 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 Growth Fund with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and American Beacon.
Diversification Opportunities for Growth Fund and American Beacon
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Growth and American is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of 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 Growth Fund 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 Growth Fund Of 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 Growth Fund i.e., Growth Fund and American Beacon go up and down completely randomly.
Pair Corralation between Growth Fund and American Beacon
Assuming the 90 days horizon Growth Fund Of is expected to generate 0.93 times more return on investment than American Beacon. However, Growth Fund Of is 1.08 times less risky than American Beacon. It trades about 0.36 of its potential returns per unit of risk. American Beacon Bridgeway is currently generating about 0.28 per unit of risk. If you would invest 6,709 in Growth Fund Of on September 4, 2024 and sell it today you would earn a total of 426.00 from holding Growth Fund Of or generate 6.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Growth Fund Of vs. American Beacon Bridgeway
Performance |
| Timeline |
| Growth Fund |
| American Beacon Bridgeway |
Growth Fund and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and American Beacon
The main advantage of trading using opposite Growth Fund and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund 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.| Growth Fund vs. Prudential Real Estate | Growth Fund vs. Great West Real Estate | Growth Fund vs. Commonwealth Real Estate | Growth Fund vs. Forum Real Estate |
| American Beacon vs. American Beacon Bridgeway | American Beacon vs. Disciplined Growth Fund | American Beacon vs. Select Fund R | American Beacon vs. Select Fund C |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |