Correlation Between American Century and Equity Growth
Can any of the company-specific risk be diversified away by investing in both American Century and Equity Growth 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 Century and Equity Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Century One and Equity Growth Fund, you can compare the effects of market volatilities on American Century and Equity Growth 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 Century with a short position of Equity Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Equity Growth.
Diversification Opportunities for American Century and Equity Growth
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Equity is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding American Century One and Equity Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Growth and American Century 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 Century One are associated (or correlated) with Equity Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Growth has no effect on the direction of American Century i.e., American Century and Equity Growth go up and down completely randomly.
Pair Corralation between American Century and Equity Growth
Assuming the 90 days horizon American Century is expected to generate 2.53 times less return on investment than Equity Growth. But when comparing it to its historical volatility, American Century One is 2.08 times less risky than Equity Growth. It trades about 0.1 of its potential returns per unit of risk. Equity Growth Fund is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,513 in Equity Growth Fund on September 12, 2024 and sell it today you would earn a total of 956.00 from holding Equity Growth Fund or generate 38.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Century One vs. Equity Growth Fund
Performance |
| Timeline |
| American Century One |
| Equity Growth |
American Century and Equity Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and Equity Growth
The main advantage of trading using opposite American Century and Equity Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, Equity Growth 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 Equity Growth will offset losses from the drop in Equity Growth's long position.| American Century vs. Rbc Emerging Markets | American Century vs. Ashmore Emerging Markets | American Century vs. Origin Emerging Markets | American Century vs. Barings Emerging Markets |
| Equity Growth vs. Ab Global Risk | Equity Growth vs. Ab Global Risk | Equity Growth vs. Legg Mason Global | Equity Growth vs. Barings Global Floating |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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