Correlation Between HCM Defender and American Century
Can any of the company-specific risk be diversified away by investing in both HCM Defender 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 HCM Defender and American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCM Defender 500 and American Century Quality, you can compare the effects of market volatilities on HCM Defender 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 HCM Defender with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCM Defender and American Century.
Diversification Opportunities for HCM Defender and American Century
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between HCM and American is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding HCM Defender 500 and American Century Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century Quality and HCM Defender 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 HCM Defender 500 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 Quality has no effect on the direction of HCM Defender i.e., HCM Defender and American Century go up and down completely randomly.
Pair Corralation between HCM Defender and American Century
Considering the 90-day investment horizon HCM Defender is expected to generate 1.18 times less return on investment than American Century. In addition to that, HCM Defender is 1.02 times more volatile than American Century Quality. It trades about 0.1 of its total potential returns per unit of risk. American Century Quality is currently generating about 0.12 per unit of volatility. If you would invest 5,948 in American Century Quality on August 30, 2024 and sell it today you would earn a total of 4,337 from holding American Century Quality or generate 72.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
HCM Defender 500 vs. American Century Quality
Performance |
| Timeline |
| HCM Defender 500 |
| American Century Quality |
HCM Defender and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HCM Defender and American Century
The main advantage of trading using opposite HCM Defender and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCM Defender 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.| HCM Defender vs. JPMorgan BetaBuilders International | HCM Defender vs. JPMorgan Core Plus | HCM Defender vs. JPMorgan BetaBuilders Canada | HCM Defender vs. JPMorgan Emerging Markets |
| American Century vs. American Century STOXX | American Century vs. American Century Quality | American Century vs. Nuveen ESG Large Cap | American Century vs. Invesco SP 500 |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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