Correlation Between Global X and American Century
Can any of the company-specific risk be diversified away by investing in both Global X 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 Global X and American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Preferred and American Century ETF, you can compare the effects of market volatilities on Global X 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 Global X with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and American Century.
Diversification Opportunities for Global X and American Century
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and American is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Global X Preferred 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 Global X 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 Global X Preferred 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 Global X i.e., Global X and American Century go up and down completely randomly.
Pair Corralation between Global X and American Century
Given the investment horizon of 90 days Global X Preferred is expected to generate 1.59 times more return on investment than American Century. However, Global X is 1.59 times more volatile than American Century ETF. It trades about -0.05 of its potential returns per unit of risk. American Century ETF is currently generating about -0.09 per unit of risk. If you would invest 2,051 in Global X Preferred on August 25, 2024 and sell it today you would lose (16.00) from holding Global X Preferred or give up 0.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Preferred vs. American Century ETF
Performance |
| Timeline |
| Global X Preferred |
| American Century ETF |
Global X and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and American Century
The main advantage of trading using opposite Global X and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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.| Global X vs. ETF Series Solutions | Global X vs. Aquagold International | Global X vs. Morningstar Unconstrained Allocation | Global X vs. High Yield Municipal Fund |
| American Century vs. ETF Series Solutions | American Century vs. Aquagold International | American Century vs. Morningstar Unconstrained Allocation | American Century vs. High Yield Municipal Fund |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |