Correlation Between Small-cap Value and American Century
Can any of the company-specific risk be diversified away by investing in both Small-cap Value and American Century 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 Small-cap Value and American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Value Fund and American Century Etf, you can compare the effects of market volatilities on Small-cap Value and American Century 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 Small-cap Value with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small-cap Value and American Century.
Diversification Opportunities for Small-cap Value and American Century
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Small-cap and American is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value Fund and American Century Etf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century Etf and Small-cap Value 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 Small Cap Value Fund are associated (or correlated) with American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century Etf has no effect on the direction of Small-cap Value i.e., Small-cap Value and American Century go up and down completely randomly.
Pair Corralation between Small-cap Value and American Century
Assuming the 90 days horizon Small-cap Value is expected to generate 2.51 times less return on investment than American Century. In addition to that, Small-cap Value is 1.02 times more volatile than American Century Etf. It trades about 0.02 of its total potential returns per unit of risk. American Century Etf is currently generating about 0.04 per unit of volatility. If you would invest 1,434 in American Century Etf on October 30, 2024 and sell it today you would earn a total of 337.00 from holding American Century Etf or generate 23.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Value Fund vs. American Century Etf
Performance |
| Timeline |
| Small Cap Value |
| American Century Etf |
Small-cap Value and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small-cap Value and American Century
The main advantage of trading using opposite Small-cap Value and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small-cap Value position performs unexpectedly, American Century 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 American Century will offset losses from the drop in American Century's long position.| Small-cap Value vs. Federated Ohio Municipal | Small-cap Value vs. Franklin Government Money | Small-cap Value vs. Transamerica Intermediate Muni | Small-cap Value vs. Artisan High Income |
| American Century vs. Dimensional Retirement Income | American Century vs. Transamerica Cleartrack Retirement | American Century vs. Hartford Moderate Allocation | American Century vs. Voya Retirement Moderate |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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