Correlation Between American Century and SPDR SSGA
Can any of the company-specific risk be diversified away by investing in both American Century and SPDR SSGA 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 SPDR SSGA 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 SPDR SSGA Small, you can compare the effects of market volatilities on American Century and SPDR SSGA 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 SPDR SSGA. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and SPDR SSGA.
Diversification Opportunities for American Century and SPDR SSGA
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and SPDR is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding American Century ETF and SPDR SSGA Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSGA Small 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 SPDR SSGA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSGA Small has no effect on the direction of American Century i.e., American Century and SPDR SSGA go up and down completely randomly.
Pair Corralation between American Century and SPDR SSGA
Given the investment horizon of 90 days American Century ETF is expected to generate 0.68 times more return on investment than SPDR SSGA. However, American Century ETF is 1.47 times less risky than SPDR SSGA. It trades about 0.03 of its potential returns per unit of risk. SPDR SSGA Small is currently generating about -0.06 per unit of risk. If you would invest 6,977 in American Century ETF on September 12, 2024 and sell it today you would earn a total of 27.00 from holding American Century ETF or generate 0.39% 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. SPDR SSGA Small
Performance |
| Timeline |
| American Century ETF |
| SPDR SSGA Small |
American Century and SPDR SSGA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and SPDR SSGA
The main advantage of trading using opposite American Century and SPDR SSGA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, SPDR SSGA 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 SPDR SSGA will offset losses from the drop in SPDR SSGA's long position.| American Century vs. Avantis Emerging Markets | American Century vs. Avantis Emerging Markets | American Century vs. Avantis Equity ETF | American Century vs. Avantis International Large |
| SPDR SSGA vs. American Sierra Gold | SPDR SSGA vs. American Century ETF | SPDR SSGA vs. Avantis Emerging Markets | SPDR SSGA vs. Avantis Emerging Markets |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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