Correlation Between Great West and American Century
Can any of the company-specific risk be diversified away by investing in both Great West 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 Great West and American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great West Loomis Sayles and American Century Ultra, you can compare the effects of market volatilities on Great West 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 Great West with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and American Century.
Diversification Opportunities for Great West and American Century
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Great and American is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Great West Loomis Sayles and American Century Ultra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century Ultra and Great West 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 Great West Loomis Sayles 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 Ultra has no effect on the direction of Great West i.e., Great West and American Century go up and down completely randomly.
Pair Corralation between Great West and American Century
Assuming the 90 days horizon Great West is expected to generate 1.72 times less return on investment than American Century. In addition to that, Great West is 1.08 times more volatile than American Century Ultra. It trades about 0.06 of its total potential returns per unit of risk. American Century Ultra is currently generating about 0.1 per unit of volatility. If you would invest 7,760 in American Century Ultra on September 12, 2024 and sell it today you would earn a total of 3,311 from holding American Century Ultra or generate 42.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great West Loomis Sayles vs. American Century Ultra
Performance |
| Timeline |
| Great West Loomis |
| American Century Ultra |
Great West and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great West and American Century
The main advantage of trading using opposite Great West and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great West 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.| Great West vs. Vanguard Small Cap Value | Great West vs. Vanguard Small Cap Value | Great West vs. Us Small Cap | Great West vs. Us Targeted Value |
| American Century vs. Heartland Value Plus | American Century vs. Great West Loomis Sayles | American Century vs. Boston Partners Small | American Century vs. Vanguard Small Cap Value |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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