Correlation Between American Century and Old Westbury
Can any of the company-specific risk be diversified away by investing in both American Century and Old Westbury 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 Old Westbury 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 Old Westbury Short Term, you can compare the effects of market volatilities on American Century and Old Westbury 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 Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Old Westbury.
Diversification Opportunities for American Century and Old Westbury
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and Old is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding American Century High and Old Westbury Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Short 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 Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Short has no effect on the direction of American Century i.e., American Century and Old Westbury go up and down completely randomly.
Pair Corralation between American Century and Old Westbury
Assuming the 90 days horizon American Century High is expected to generate 2.73 times more return on investment than Old Westbury. However, American Century is 2.73 times more volatile than Old Westbury Short Term. It trades about 0.13 of its potential returns per unit of risk. Old Westbury Short Term is currently generating about 0.17 per unit of risk. If you would invest 712.00 in American Century High on August 31, 2024 and sell it today you would earn a total of 161.00 from holding American Century High or generate 22.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 38.38% |
| Values | Daily Returns |
American Century High vs. Old Westbury Short Term
Performance |
| Timeline |
| American Century High |
| Old Westbury Short |
American Century and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and Old Westbury
The main advantage of trading using opposite American Century and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury's long position.| American Century vs. Lord Abbett Convertible | American Century vs. Allianzgi Convertible Income | American Century vs. Fidelity Sai Convertible | American Century vs. Virtus Convertible |
| Old Westbury vs. American Century High | Old Westbury vs. Fidelity Capital Income | Old Westbury vs. Pioneer High Yield | Old Westbury vs. Western Asset High |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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