Correlation Between Emerging Markets and American Century
Can any of the company-specific risk be diversified away by investing in both Emerging Markets 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 Emerging Markets and American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Emerging Markets and American Century One, you can compare the effects of market volatilities on Emerging Markets 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 Emerging Markets with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and American Century.
Diversification Opportunities for Emerging Markets and American Century
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Emerging and American is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding The Emerging Markets and American Century One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century One and Emerging Markets 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 The Emerging Markets 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 One has no effect on the direction of Emerging Markets i.e., Emerging Markets and American Century go up and down completely randomly.
Pair Corralation between Emerging Markets and American Century
Assuming the 90 days horizon The Emerging Markets is expected to generate 2.33 times more return on investment than American Century. However, Emerging Markets is 2.33 times more volatile than American Century One. It trades about 0.05 of its potential returns per unit of risk. American Century One is currently generating about 0.1 per unit of risk. If you would invest 1,616 in The Emerging Markets on September 12, 2024 and sell it today you would earn a total of 322.00 from holding The Emerging Markets or generate 19.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
The Emerging Markets vs. American Century One
Performance |
| Timeline |
| Emerging Markets |
| American Century One |
Emerging Markets and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerging Markets and American Century
The main advantage of trading using opposite Emerging Markets and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets 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.| Emerging Markets vs. Ab Global Risk | Emerging Markets vs. Jhancock Global Equity | Emerging Markets vs. Kinetics Global Fund | Emerging Markets vs. Ab Global Real |
| American Century vs. Small Cap Stock | American Century vs. Oppenheimer International Diversified | American Century vs. Delaware Limited Term Diversified | American Century vs. Blackrock Sm Cap |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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