Correlation Between IShares Intermediate and American Century
Can any of the company-specific risk be diversified away by investing in both IShares Intermediate 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 Intermediate 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 Intermediate GovernmentCredit and American Century Short, you can compare the effects of market volatilities on IShares Intermediate 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 Intermediate with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Intermediate and American Century.
Diversification Opportunities for IShares Intermediate and American Century
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and American is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding iShares Intermediate Governmen and American Century Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century Short and IShares Intermediate 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 Intermediate GovernmentCredit 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 Short has no effect on the direction of IShares Intermediate i.e., IShares Intermediate and American Century go up and down completely randomly.
Pair Corralation between IShares Intermediate and American Century
Considering the 90-day investment horizon IShares Intermediate is expected to generate 1.35 times less return on investment than American Century. In addition to that, IShares Intermediate is 1.83 times more volatile than American Century Short. It trades about 0.06 of its total potential returns per unit of risk. American Century Short is currently generating about 0.15 per unit of volatility. If you would invest 4,649 in American Century Short on September 1, 2024 and sell it today you would earn a total of 478.00 from holding American Century Short or generate 10.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.78% |
| Values | Daily Returns |
iShares Intermediate Governmen vs. American Century Short
Performance |
| Timeline |
| iShares Intermediate |
| American Century Short |
IShares Intermediate and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Intermediate and American Century
The main advantage of trading using opposite IShares Intermediate and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Intermediate 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 Intermediate vs. iShares GovernmentCredit Bond | IShares Intermediate vs. iShares Agency Bond | IShares Intermediate vs. iShares New York | IShares Intermediate vs. iShares MBS ETF |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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