Correlation Between DSJA and American Century
Can any of the company-specific risk be diversified away by investing in both DSJA 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 DSJA and American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DSJA and American Century ETF, you can compare the effects of market volatilities on DSJA 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 DSJA with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of DSJA and American Century.
Diversification Opportunities for DSJA and American Century
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DSJA and American is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding DSJA 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 DSJA 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 DSJA 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 DSJA i.e., DSJA and American Century go up and down completely randomly.
Pair Corralation between DSJA and American Century
Given the investment horizon of 90 days DSJA is expected to generate 1.24 times less return on investment than American Century. But when comparing it to its historical volatility, DSJA is 1.12 times less risky than American Century. It trades about 0.14 of its potential returns per unit of risk. American Century ETF is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4,925 in American Century ETF on August 30, 2024 and sell it today you would earn a total of 2,083 from holding American Century ETF or generate 42.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 52.54% |
| Values | Daily Returns |
DSJA vs. American Century ETF
Performance |
| Timeline |
| DSJA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| American Century ETF |
DSJA and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DSJA and American Century
The main advantage of trading using opposite DSJA and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DSJA 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.| DSJA vs. ProShares VIX Mid Term | DSJA vs. ProShares VIX Short Term | DSJA vs. iPath Series B | DSJA vs. ProShares Short Russell2000 |
| American Century vs. FT Vest Equity | American Century vs. Northern Lights | American Century vs. Dimensional International High | American Century vs. First Trust Exchange Traded |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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