Correlation Between American Century and TGIF
Can any of the company-specific risk be diversified away by investing in both American Century and TGIF 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 TGIF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Century Multisector and TGIF, you can compare the effects of market volatilities on American Century and TGIF 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 TGIF. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and TGIF.
Diversification Opportunities for American Century and TGIF
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and TGIF is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding American Century Multisector and TGIF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TGIF 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 Multisector are associated (or correlated) with TGIF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TGIF has no effect on the direction of American Century i.e., American Century and TGIF go up and down completely randomly.
Pair Corralation between American Century and TGIF
If you would invest 4,367 in American Century Multisector on August 30, 2024 and sell it today you would earn a total of 19.00 from holding American Century Multisector or generate 0.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.35% |
| Values | Daily Returns |
American Century Multisector vs. TGIF
Performance |
| Timeline |
| American Century Mul |
| TGIF |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
American Century and TGIF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and TGIF
The main advantage of trading using opposite American Century and TGIF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, TGIF 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 TGIF will offset losses from the drop in TGIF's long position.The idea behind American Century Multisector and TGIF pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| TGIF vs. Axonic Strategic Income | TGIF vs. ALPSSmith Credit Opportunities | TGIF vs. First Trust TCW | TGIF vs. DEUTSCHE MID 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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