Correlation Between Select Fund and American Beacon
Can any of the company-specific risk be diversified away by investing in both Select 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 Select 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 Select Fund R and American Beacon Bridgeway, you can compare the effects of market volatilities on Select 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 Select Fund with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Fund and American Beacon.
Diversification Opportunities for Select Fund and American Beacon
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Select and American is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Select Fund R 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 Select 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 Select Fund R 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 Select Fund i.e., Select Fund and American Beacon go up and down completely randomly.
Pair Corralation between Select Fund and American Beacon
Assuming the 90 days horizon Select Fund R is expected to generate 0.62 times more return on investment than American Beacon. However, Select Fund R is 1.6 times less risky than American Beacon. It trades about 0.04 of its potential returns per unit of risk. American Beacon Bridgeway is currently generating about -0.06 per unit of risk. If you would invest 11,091 in Select Fund R on September 24, 2024 and sell it today you would earn a total of 253.00 from holding Select Fund R or generate 2.28% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Select Fund R vs. American Beacon Bridgeway
Performance |
Timeline |
Select Fund R |
American Beacon Bridgeway |
Select Fund and American Beacon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Select Fund and American Beacon
The main advantage of trading using opposite Select Fund and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select 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.Select Fund vs. Select Fund C | Select Fund vs. Ultra Fund C | Select Fund vs. Ultra Fund R6 | Select Fund vs. Nasdaq 100 Fund Class |
American Beacon vs. American Beacon Bridgeway | American Beacon vs. Ab Centrated Growth | American Beacon vs. Disciplined Growth Fund | American Beacon vs. Select Fund R |
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.
Other Complementary Tools
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
CEOs Directory Screen CEOs from public companies around the world | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |