Correlation Between American Century and Federated Strategic
Can any of the company-specific risk be diversified away by investing in both American Century and Federated Strategic 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 Federated Strategic 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 Federated Strategic Value, you can compare the effects of market volatilities on American Century and Federated Strategic 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 Federated Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Federated Strategic.
Diversification Opportunities for American Century and Federated Strategic
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Federated is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding American Century Diversified and Federated Strategic Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Strategic Value 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 Federated Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Strategic Value has no effect on the direction of American Century i.e., American Century and Federated Strategic go up and down completely randomly.
Pair Corralation between American Century and Federated Strategic
Assuming the 90 days horizon American Century is expected to generate 3.94 times less return on investment than Federated Strategic. But when comparing it to its historical volatility, American Century Diversified is 1.83 times less risky than Federated Strategic. It trades about 0.09 of its potential returns per unit of risk. Federated Strategic Value is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 556.00 in Federated Strategic Value on September 1, 2024 and sell it today you would earn a total of 84.00 from holding Federated Strategic Value or generate 15.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
American Century Diversified vs. Federated Strategic Value
Performance |
| Timeline |
| American Century Div |
| Federated Strategic Value |
American Century and Federated Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and Federated Strategic
The main advantage of trading using opposite American Century and Federated Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, Federated Strategic 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 Federated Strategic will offset losses from the drop in Federated Strategic's long position.| American Century vs. Ms Global Fixed | American Century vs. Ultra Short Fixed Income | American Century vs. Calamos Global Equity | American Century vs. Cutler Equity |
| Federated Strategic vs. Federated Emerging Market | Federated Strategic vs. Federated Mdt All | Federated Strategic vs. Federated Mdt Balanced | Federated Strategic vs. Federated Global Allocation |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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