Correlation Between IShares Trust and American Century
Can any of the company-specific risk be diversified away by investing in both IShares Trust 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 IShares Trust and American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and American Century Sustainable, you can compare the effects of market volatilities on IShares Trust 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 IShares Trust with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and American Century.
Diversification Opportunities for IShares Trust and American Century
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IShares and American is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and American Century Sustainable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century Sus and IShares Trust 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 iShares Trust 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 Sus has no effect on the direction of IShares Trust i.e., IShares Trust and American Century go up and down completely randomly.
Pair Corralation between IShares Trust and American Century
Given the investment horizon of 90 days IShares Trust is expected to generate 2.92 times less return on investment than American Century. But when comparing it to its historical volatility, iShares Trust is 3.34 times less risky than American Century. It trades about 0.08 of its potential returns per unit of risk. American Century Sustainable is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5,256 in American Century Sustainable on September 3, 2024 and sell it today you would earn a total of 519.00 from holding American Century Sustainable or generate 9.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. American Century Sustainable
Performance |
| Timeline |
| iShares Trust |
| American Century Sus |
IShares Trust and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and American Century
The main advantage of trading using opposite IShares Trust and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust 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.| IShares Trust vs. iShares ESG Aggregate | IShares Trust vs. iShares ESG Advanced | IShares Trust vs. iShares ESG Advanced | IShares Trust vs. iShares ESG USD |
| American Century vs. American Century Sustainable | American Century vs. IndexIQ Active ETF | American Century vs. FlexShares STOXX Global | American Century vs. Putnam Focused Large |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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