Correlation Between Ab High and American Century
Can any of the company-specific risk be diversified away by investing in both Ab High and American Century 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 Ab High and American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab High Income and American Century Mid, you can compare the effects of market volatilities on Ab High and American Century 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 Ab High with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab High and American Century.
Diversification Opportunities for Ab High and American Century
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AGDAX and American is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ab High Income and American Century Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century Mid and Ab High 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 Ab High Income are associated (or correlated) with American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century Mid has no effect on the direction of Ab High i.e., Ab High and American Century go up and down completely randomly.
Pair Corralation between Ab High and American Century
Assuming the 90 days horizon Ab High is expected to generate 10.26 times less return on investment than American Century. But when comparing it to its historical volatility, Ab High Income is 4.83 times less risky than American Century. It trades about 0.18 of its potential returns per unit of risk. American Century Mid is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 1,686 in American Century Mid on September 1, 2024 and sell it today you would earn a total of 101.00 from holding American Century Mid or generate 5.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab High Income vs. American Century Mid
Performance |
| Timeline |
| Ab High Income |
| American Century Mid |
Ab High and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab High and American Century
The main advantage of trading using opposite Ab High and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab High position performs unexpectedly, American Century 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 American Century will offset losses from the drop in American Century's long position.| Ab High vs. Ab Global E | Ab High vs. Ab Global E | Ab High vs. Ab Global E | Ab High vs. Ab Minnesota Portfolio |
| American Century vs. Metropolitan West High | American Century vs. Siit High Yield | American Century vs. Ab High Income | American Century vs. Alliancebernstein Global 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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