Correlation Between American Century and Pear Tree
Can any of the company-specific risk be diversified away by investing in both American Century and Pear Tree 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 Pear Tree 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 Pear Tree Polaris, you can compare the effects of market volatilities on American Century and Pear Tree 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 Pear Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Pear Tree.
Diversification Opportunities for American Century and Pear Tree
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Pear is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding American Century High and Pear Tree Polaris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pear Tree Polaris 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 Pear Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pear Tree Polaris has no effect on the direction of American Century i.e., American Century and Pear Tree go up and down completely randomly.
Pair Corralation between American Century and Pear Tree
Assuming the 90 days horizon American Century High is expected to generate 0.21 times more return on investment than Pear Tree. However, American Century High is 4.81 times less risky than Pear Tree. It trades about 0.17 of its potential returns per unit of risk. Pear Tree Polaris is currently generating about -0.08 per unit of risk. If you would invest 862.00 in American Century High on September 12, 2024 and sell it today you would earn a total of 14.00 from holding American Century High or generate 1.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Century High vs. Pear Tree Polaris
Performance |
| Timeline |
| American Century High |
| Pear Tree Polaris |
American Century and Pear Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and Pear Tree
The main advantage of trading using opposite American Century and Pear Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, Pear Tree 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 Pear Tree will offset losses from the drop in Pear Tree's long position.| American Century vs. Elfun Government Money | American Century vs. Ab Government Exchange | American Century vs. Chestnut Street Exchange | American Century vs. Edward Jones Money |
| Pear Tree vs. Oakmark International Fund | Pear Tree vs. Oakmark Global Fund | Pear Tree vs. Oakmark Select Fund | Pear Tree vs. Oakmark Fund Investor |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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