Correlation Between IShares Russell and American Century
Can any of the company-specific risk be diversified away by investing in both IShares Russell 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 Russell 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 Russell 2000 and American Century ETF, you can compare the effects of market volatilities on IShares Russell 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 Russell with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Russell and American Century.
Diversification Opportunities for IShares Russell and American Century
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and American is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell 2000 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 IShares Russell 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 Russell 2000 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 IShares Russell i.e., IShares Russell and American Century go up and down completely randomly.
Pair Corralation between IShares Russell and American Century
Considering the 90-day investment horizon IShares Russell is expected to generate 1.14 times less return on investment than American Century. But when comparing it to its historical volatility, iShares Russell 2000 is 1.1 times less risky than American Century. It trades about 0.13 of its potential returns per unit of risk. American Century ETF is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 5,402 in American Century ETF on August 30, 2024 and sell it today you would earn a total of 495.00 from holding American Century ETF or generate 9.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Russell 2000 vs. American Century ETF
Performance |
| Timeline |
| iShares Russell 2000 |
| American Century ETF |
IShares Russell and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Russell and American Century
The main advantage of trading using opposite IShares Russell and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Russell 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 Russell vs. iShares Russell 2000 | IShares Russell vs. iShares Russell 1000 | IShares Russell vs. iShares Russell Mid Cap | IShares Russell vs. iShares Russell 1000 |
| American Century vs. American Sierra Gold | American Century vs. American Century ETF | American Century vs. Avantis Emerging Markets | American Century vs. Avantis 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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