Correlation Between Mid Cap and American Century
Can any of the company-specific risk be diversified away by investing in both Mid Cap 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 Mid Cap and American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Cap Value and American Century One, you can compare the effects of market volatilities on Mid Cap 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 Mid Cap with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and American Century.
Diversification Opportunities for Mid Cap and American Century
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mid and American is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Value and American Century One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century One and Mid Cap 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 Mid Cap Value 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 One has no effect on the direction of Mid Cap i.e., Mid Cap and American Century go up and down completely randomly.
Pair Corralation between Mid Cap and American Century
Assuming the 90 days horizon Mid Cap is expected to generate 2.99 times less return on investment than American Century. In addition to that, Mid Cap is 1.2 times more volatile than American Century One. It trades about 0.02 of its total potential returns per unit of risk. American Century One is currently generating about 0.09 per unit of volatility. If you would invest 989.00 in American Century One on October 22, 2024 and sell it today you would earn a total of 139.00 from holding American Century One or generate 14.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Cap Value vs. American Century One
Performance |
| Timeline |
| Mid Cap Value |
| American Century One |
Mid Cap and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and American Century
The main advantage of trading using opposite Mid Cap and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap 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.| Mid Cap vs. Prudential Government Money | Mid Cap vs. Lord Abbett Emerging | Mid Cap vs. Schwab Government Money | Mid Cap vs. Voya Government Money |
| American Century vs. Artisan High Income | American Century vs. Jpmorgan High Yield | American Century vs. Transamerica High Yield | American Century vs. Lord Abbett Short |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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