Correlation Between American Century and Federated Institutional
Can any of the company-specific risk be diversified away by investing in both American Century and Federated Institutional 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 Institutional into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Century High and Federated Institutional High, you can compare the effects of market volatilities on American Century and Federated Institutional 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 Institutional. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Federated Institutional.
Diversification Opportunities for American Century and Federated Institutional
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and FEDERATED is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding American Century High and Federated Institutional High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Institutional 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 High are associated (or correlated) with Federated Institutional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Institutional has no effect on the direction of American Century i.e., American Century and Federated Institutional go up and down completely randomly.
Pair Corralation between American Century and Federated Institutional
Assuming the 90 days horizon American Century High is expected to generate 1.07 times more return on investment than Federated Institutional. However, American Century is 1.07 times more volatile than Federated Institutional High. It trades about 0.19 of its potential returns per unit of risk. Federated Institutional High is currently generating about 0.14 per unit of risk. If you would invest 858.00 in American Century High on September 2, 2024 and sell it today you would earn a total of 16.00 from holding American Century High or generate 1.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Century High vs. Federated Institutional High
Performance |
| Timeline |
| American Century High |
| Federated Institutional |
American Century and Federated Institutional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and Federated Institutional
The main advantage of trading using opposite American Century and Federated Institutional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, Federated Institutional 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 Institutional will offset losses from the drop in Federated Institutional's long position.| American Century vs. Tekla Healthcare Opportunities | American Century vs. Invesco Global Health | American Century vs. Health Care Fund | American Century vs. Live Oak Health |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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