Correlation Between American Century and Small Cap
Can any of the company-specific risk be diversified away by investing in both American Century and Small Cap 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 Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Century Etf and Small Cap Growth Profund, you can compare the effects of market volatilities on American Century and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Small Cap.
Diversification Opportunities for American Century and Small Cap
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Small is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding American Century Etf and Small Cap Growth Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Growth 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 Etf are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Growth has no effect on the direction of American Century i.e., American Century and Small Cap go up and down completely randomly.
Pair Corralation between American Century and Small Cap
Assuming the 90 days horizon American Century Etf is expected to generate 1.05 times more return on investment than Small Cap. However, American Century is 1.05 times more volatile than Small Cap Growth Profund. It trades about 0.05 of its potential returns per unit of risk. Small Cap Growth Profund is currently generating about 0.05 per unit of risk. If you would invest 1,543 in American Century Etf on November 3, 2024 and sell it today you would earn a total of 210.00 from holding American Century Etf or generate 13.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Century Etf vs. Small Cap Growth Profund
Performance |
| Timeline |
| American Century Etf |
| Small Cap Growth |
American Century and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and Small Cap
The main advantage of trading using opposite American Century and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| American Century vs. Mesirow Financial Small | American Century vs. Financial Industries Fund | American Century vs. Davis Financial Fund | American Century vs. Vanguard Financials Index |
| Small Cap vs. Small Cap Value Profund | Small Cap vs. Mid Cap Growth Profund | Small Cap vs. Mid Cap Value Profund | Small Cap vs. Small Cap Profund Small Cap |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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