Correlation Between American Century and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both American Century and Xtrackers MSCI 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 Xtrackers MSCI 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 Xtrackers MSCI Emerging, you can compare the effects of market volatilities on American Century and Xtrackers MSCI 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 Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Xtrackers MSCI.
Diversification Opportunities for American Century and Xtrackers MSCI
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Xtrackers is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding American Century ETF and Xtrackers MSCI Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI Emerging 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 Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI Emerging has no effect on the direction of American Century i.e., American Century and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between American Century and Xtrackers MSCI
Given the investment horizon of 90 days American Century ETF is expected to generate 1.21 times more return on investment than Xtrackers MSCI. However, American Century is 1.21 times more volatile than Xtrackers MSCI Emerging. It trades about -0.07 of its potential returns per unit of risk. Xtrackers MSCI Emerging is currently generating about -0.13 per unit of risk. If you would invest 5,686 in American Century ETF on September 2, 2024 and sell it today you would lose (93.00) from holding American Century ETF or give up 1.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Century ETF vs. Xtrackers MSCI Emerging
Performance |
| Timeline |
| American Century ETF |
| Xtrackers MSCI Emerging |
American Century and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and Xtrackers MSCI
The main advantage of trading using opposite American Century and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, Xtrackers MSCI 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 Xtrackers MSCI will offset losses from the drop in Xtrackers MSCI's long position.| American Century vs. Xtrackers MSCI Emerging | American Century vs. FlexShares Morningstar Emerging | American Century vs. First Trust Emerging |
| Xtrackers MSCI vs. Xtrackers MSCI EAFE | Xtrackers MSCI vs. Xtrackers MSCI All | Xtrackers MSCI vs. Xtrackers MSCI Japan | Xtrackers MSCI vs. iShares Currency Hedged |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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