Correlation Between American Century and Multi Manager
Can any of the company-specific risk be diversified away by investing in both American Century and Multi Manager 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 Multi Manager 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 Multi Manager High Yield, you can compare the effects of market volatilities on American Century and Multi Manager 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 Multi Manager. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Multi Manager.
Diversification Opportunities for American Century and Multi Manager
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Multi is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding American Century High and Multi Manager High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Manager High 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 Multi Manager. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Manager High has no effect on the direction of American Century i.e., American Century and Multi Manager go up and down completely randomly.
Pair Corralation between American Century and Multi Manager
Assuming the 90 days horizon American Century High is expected to generate 1.28 times more return on investment than Multi Manager. However, American Century is 1.28 times more volatile than Multi Manager High Yield. It trades about 0.16 of its potential returns per unit of risk. Multi Manager High Yield is currently generating about 0.18 per unit of risk. If you would invest 749.00 in American Century High on August 28, 2024 and sell it today you would earn a total of 122.00 from holding American Century High or generate 16.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.72% |
| Values | Daily Returns |
American Century High vs. Multi Manager High Yield
Performance |
| Timeline |
| American Century High |
| Multi Manager High |
American Century and Multi Manager Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and Multi Manager
The main advantage of trading using opposite American Century and Multi Manager positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, Multi Manager 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 Multi Manager will offset losses from the drop in Multi Manager's long position.| American Century vs. Mid Cap Value | American Century vs. Equity Growth Fund | American Century vs. Income Growth Fund | American Century vs. Diversified Bond Fund |
| Multi Manager vs. Gabelli Gold Fund | Multi Manager vs. Gamco Natural Resources | Multi Manager vs. Wells Fargo Advantage | Multi Manager vs. Short Precious Metals |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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