Correlation Between High Yield and American Century
Can any of the company-specific risk be diversified away by investing in both High Yield and American Century 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 High Yield and American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Municipal Fund and American Century High, you can compare the effects of market volatilities on High Yield and American Century 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 High Yield with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Yield and American Century.
Diversification Opportunities for High Yield and American Century
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between High and American is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and American Century High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century High and High Yield 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 High Yield Municipal Fund are associated (or correlated) with American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century High has no effect on the direction of High Yield i.e., High Yield and American Century go up and down completely randomly.
Pair Corralation between High Yield and American Century
Assuming the 90 days horizon High Yield is expected to generate 1.1 times less return on investment than American Century. In addition to that, High Yield is 1.14 times more volatile than American Century High. It trades about 0.17 of its total potential returns per unit of risk. American Century High is currently generating about 0.21 per unit of volatility. If you would invest 767.00 in American Century High on September 14, 2024 and sell it today you would earn a total of 107.00 from holding American Century High or generate 13.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Municipal Fund vs. American Century High
Performance |
| Timeline |
| High Yield Municipal |
| American Century High |
High Yield and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Yield and American Century
The main advantage of trading using opposite High Yield and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Yield position performs unexpectedly, American Century 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 Century will offset losses from the drop in American Century's long position.| High Yield vs. High Yield Fund Investor | High Yield vs. Intermediate Term Tax Free Bond | High Yield vs. California High Yield Municipal | High Yield vs. T Rowe Price |
| American Century vs. High Yield Municipal Fund | American Century vs. Diversified Bond Fund | American Century vs. Ginnie Mae Fund | American Century vs. Utilities Fund Investor |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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