Correlation Between SPDR Global and American Century
Can any of the company-specific risk be diversified away by investing in both SPDR Global 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 SPDR Global and American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Global Dow and American Century ETF, you can compare the effects of market volatilities on SPDR Global 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 SPDR Global with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Global and American Century.
Diversification Opportunities for SPDR Global and American Century
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and American is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Global Dow 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 SPDR Global 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 SPDR Global Dow 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 SPDR Global i.e., SPDR Global and American Century go up and down completely randomly.
Pair Corralation between SPDR Global and American Century
Considering the 90-day investment horizon SPDR Global Dow is expected to under-perform the American Century. But the etf apears to be less risky and, when comparing its historical volatility, SPDR Global Dow is 1.23 times less risky than American Century. The etf trades about -0.02 of its potential returns per unit of risk. The American Century ETF is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 6,277 in American Century ETF on August 30, 2024 and sell it today you would earn a total of 197.00 from holding American Century ETF or generate 3.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Global Dow vs. American Century ETF
Performance |
| Timeline |
| SPDR Global Dow |
| American Century ETF |
SPDR Global and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Global and American Century
The main advantage of trading using opposite SPDR Global and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Global 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.| SPDR Global vs. iShares Global 100 | SPDR Global vs. iShares MSCI Belgium | SPDR Global vs. iShares MSCI Netherlands | SPDR Global vs. iShares Dow Jones |
| American Century vs. Davis Select International | American Century vs. Tidal ETF Trust | American Century vs. Principal Value ETF | American Century vs. WisdomTree 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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