Correlation Between SPDR ICE and American Century
Can any of the company-specific risk be diversified away by investing in both SPDR ICE 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 SPDR ICE and American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR ICE Preferred and American Century ETF, you can compare the effects of market volatilities on SPDR ICE 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 SPDR ICE with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR ICE and American Century.
Diversification Opportunities for SPDR ICE and American Century
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and American is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding SPDR ICE 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 SPDR ICE 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 SPDR ICE 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 SPDR ICE i.e., SPDR ICE and American Century go up and down completely randomly.
Pair Corralation between SPDR ICE and American Century
Considering the 90-day investment horizon SPDR ICE is expected to generate 1.2 times less return on investment than American Century. In addition to that, SPDR ICE is 1.38 times more volatile than American Century ETF. It trades about 0.08 of its total potential returns per unit of risk. American Century ETF is currently generating about 0.14 per unit of volatility. If you would invest 3,541 in American Century ETF on August 29, 2024 and sell it today you would earn a total of 217.00 from holding American Century ETF or generate 6.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR ICE Preferred vs. American Century ETF
Performance |
| Timeline |
| SPDR ICE Preferred |
| American Century ETF |
SPDR ICE and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR ICE and American Century
The main advantage of trading using opposite SPDR ICE and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR ICE 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.| SPDR ICE vs. VanEck Preferred Securities | SPDR ICE vs. Invesco Preferred ETF | SPDR ICE vs. Invesco Financial Preferred | SPDR ICE vs. Global X SuperIncome |
| American Century vs. American Century Quality | American Century vs. Principal Spectrum Preferred | American Century vs. Global X Variable | American Century vs. First Trust Institutional |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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