Correlation Between American Century and The Hartford
Can any of the company-specific risk be diversified away by investing in both American Century and The Hartford 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 The Hartford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Century Diversified and The Hartford Municipal, you can compare the effects of market volatilities on American Century and The Hartford 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 The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and The Hartford.
Diversification Opportunities for American Century and The Hartford
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and The is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding American Century Diversified and The Hartford Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hartford Municipal 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 Diversified are associated (or correlated) with The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Hartford Municipal has no effect on the direction of American Century i.e., American Century and The Hartford go up and down completely randomly.
Pair Corralation between American Century and The Hartford
Assuming the 90 days horizon American Century is expected to generate 1.2 times less return on investment than The Hartford. In addition to that, American Century is 2.23 times more volatile than The Hartford Municipal. It trades about 0.03 of its total potential returns per unit of risk. The Hartford Municipal is currently generating about 0.09 per unit of volatility. If you would invest 769.00 in The Hartford Municipal on September 3, 2024 and sell it today you would earn a total of 72.00 from holding The Hartford Municipal or generate 9.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Century Diversified vs. The Hartford Municipal
Performance |
| Timeline |
| American Century Div |
| The Hartford Municipal |
American Century and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and The Hartford
The main advantage of trading using opposite American Century and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, The Hartford 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 The Hartford will offset losses from the drop in The Hartford's long position.| American Century vs. Vanguard Total Bond | American Century vs. Vanguard Total Bond | American Century vs. Vanguard Total Bond | American Century vs. Vanguard Total Bond |
| The Hartford vs. T Rowe Price | The Hartford vs. Volumetric Fund Volumetric | The Hartford vs. Semiconductor Ultrasector Profund | The Hartford vs. Mirova Global Green |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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