Correlation Between American Century and IShares 1
Can any of the company-specific risk be diversified away by investing in both American Century and IShares 1 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 IShares 1 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 iShares 1 5 Year, you can compare the effects of market volatilities on American Century and IShares 1 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 IShares 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and IShares 1.
Diversification Opportunities for American Century and IShares 1
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and IShares is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding American Century ETF and iShares 1 5 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 1 5 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 IShares 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares 1 5 has no effect on the direction of American Century i.e., American Century and IShares 1 go up and down completely randomly.
Pair Corralation between American Century and IShares 1
Given the investment horizon of 90 days American Century ETF is expected to under-perform the IShares 1. But the etf apears to be less risky and, when comparing its historical volatility, American Century ETF is 1.02 times less risky than IShares 1. The etf trades about -0.01 of its potential returns per unit of risk. The iShares 1 5 Year is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 5,197 in iShares 1 5 Year on September 12, 2024 and sell it today you would earn a total of 8.90 from holding iShares 1 5 Year or generate 0.17% 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. iShares 1 5 Year
Performance |
| Timeline |
| American Century ETF |
| iShares 1 5 |
American Century and IShares 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and IShares 1
The main advantage of trading using opposite American Century and IShares 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, IShares 1 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 IShares 1 will offset losses from the drop in IShares 1's long position.| American Century vs. Avantis Core Fixed | American Century vs. Avantis Emerging Markets | American Century vs. Avantis International Equity |
| IShares 1 vs. iShares 5 10 Year | IShares 1 vs. iShares 0 5 Year | IShares 1 vs. SPDR Barclays Short | IShares 1 vs. iShares Core Total |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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