Correlation Between American Century and Hartford Municipal
Can any of the company-specific risk be diversified away by investing in both American Century and Hartford Municipal 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 American Century and Hartford Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Century Diversified and Hartford Municipal Opportunities, you can compare the effects of market volatilities on American Century and Hartford Municipal 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 American Century with a short position of Hartford Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Hartford Municipal.
Diversification Opportunities for American Century and Hartford Municipal
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Hartford is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding American Century Diversified and Hartford Municipal Opportuniti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Municipal and American Century 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 American Century Diversified are associated (or correlated) with Hartford Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Municipal has no effect on the direction of American Century i.e., American Century and Hartford Municipal go up and down completely randomly.
Pair Corralation between American Century and Hartford Municipal
Given the investment horizon of 90 days American Century Diversified is expected to generate 1.42 times more return on investment than Hartford Municipal. However, American Century is 1.42 times more volatile than Hartford Municipal Opportunities. It trades about 0.19 of its potential returns per unit of risk. Hartford Municipal Opportunities is currently generating about 0.19 per unit of risk. If you would invest 4,633 in American Century Diversified on September 2, 2024 and sell it today you would earn a total of 89.00 from holding American Century Diversified or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Century Diversified vs. Hartford Municipal Opportuniti
Performance |
| Timeline |
| American Century Div |
| Hartford Municipal |
American Century and Hartford Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and Hartford Municipal
The main advantage of trading using opposite American Century and Hartford Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, Hartford Municipal 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 Hartford Municipal will offset losses from the drop in Hartford Municipal's long position.| American Century vs. iShares Edge Investment | American Century vs. American Century STOXX | American Century vs. iShares Inflation Hedged | American Century vs. Franklin Liberty Investment |
| Hartford Municipal vs. IQ MacKay Municipal | Hartford Municipal vs. IQ MacKay Municipal | Hartford Municipal vs. Franklin Liberty Federal | Hartford Municipal vs. Franklin Liberty Intermediate |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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