Correlation Between Victory Strategic and American Beacon
Can any of the company-specific risk be diversified away by investing in both Victory Strategic 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 Victory Strategic and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Victory Strategic Allocation and American Beacon Bridgeway, you can compare the effects of market volatilities on Victory Strategic 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 Victory Strategic with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory Strategic and American Beacon.
Diversification Opportunities for Victory Strategic and American Beacon
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VICTORY and American is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Victory Strategic Allocation 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 Victory Strategic 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 Victory Strategic Allocation 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 Victory Strategic i.e., Victory Strategic and American Beacon go up and down completely randomly.
Pair Corralation between Victory Strategic and American Beacon
Assuming the 90 days horizon Victory Strategic is expected to generate 2.91 times less return on investment than American Beacon. But when comparing it to its historical volatility, Victory Strategic Allocation is 2.41 times less risky than American Beacon. It trades about 0.27 of its potential returns per unit of risk. American Beacon Bridgeway is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 2,680 in American Beacon Bridgeway on September 1, 2024 and sell it today you would earn a total of 193.00 from holding American Beacon Bridgeway or generate 7.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Victory Strategic Allocation vs. American Beacon Bridgeway
Performance |
| Timeline |
| Victory Strategic |
| American Beacon Bridgeway |
Victory Strategic and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Victory Strategic and American Beacon
The main advantage of trading using opposite Victory Strategic and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victory Strategic 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.| Victory Strategic vs. Victory Rs International | Victory Strategic vs. Victory Sycamore Established | Victory Strategic vs. Victory Integrity Discovery | Victory Strategic vs. Victory Munder Multi Cap |
| American Beacon vs. Victory Strategic Allocation | American Beacon vs. Jhancock Disciplined Value | American Beacon vs. Morningstar Unconstrained Allocation | American Beacon vs. Aqr Large Cap |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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