Correlation Between American Century and Nasdaq-100 Index
Can any of the company-specific risk be diversified away by investing in both American Century and Nasdaq-100 Index 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 Nasdaq-100 Index into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Century Small and Nasdaq 100 Index Fund, you can compare the effects of market volatilities on American Century and Nasdaq-100 Index 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 Nasdaq-100 Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Nasdaq-100 Index.
Diversification Opportunities for American Century and Nasdaq-100 Index
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Nasdaq-100 is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding American Century Small and Nasdaq 100 Index Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 Index 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 Small are associated (or correlated) with Nasdaq-100 Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 Index has no effect on the direction of American Century i.e., American Century and Nasdaq-100 Index go up and down completely randomly.
Pair Corralation between American Century and Nasdaq-100 Index
Assuming the 90 days horizon American Century Small is expected to under-perform the Nasdaq-100 Index. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Century Small is 1.03 times less risky than Nasdaq-100 Index. The mutual fund trades about -0.36 of its potential returns per unit of risk. The Nasdaq 100 Index Fund is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest 5,240 in Nasdaq 100 Index Fund on December 4, 2024 and sell it today you would lose (211.00) from holding Nasdaq 100 Index Fund or give up 4.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Century Small vs. Nasdaq 100 Index Fund
Performance |
| Timeline |
| American Century Small |
| Nasdaq 100 Index |
American Century and Nasdaq-100 Index Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and Nasdaq-100 Index
The main advantage of trading using opposite American Century and Nasdaq-100 Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, Nasdaq-100 Index 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 Nasdaq-100 Index will offset losses from the drop in Nasdaq-100 Index's long position.| American Century vs. Metropolitan West Ultra | American Century vs. Aqr Sustainable Long Short | American Century vs. Ashmore Emerging Markets | American Century vs. Goldman Sachs Emerging |
| Nasdaq-100 Index vs. Access Capital Munity | Nasdaq-100 Index vs. Aig Government Money | Nasdaq-100 Index vs. Bbh Intermediate Municipal | Nasdaq-100 Index vs. Old Westbury Municipal |
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 Stocks Directory module to find actively traded stocks across global markets.
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