Correlation Between American Century and HCM Defender
Can any of the company-specific risk be diversified away by investing in both American Century and HCM Defender 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 HCM Defender into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Century Quality and HCM Defender 100, you can compare the effects of market volatilities on American Century and HCM Defender 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 HCM Defender. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and HCM Defender.
Diversification Opportunities for American Century and HCM Defender
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and HCM is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding American Century Quality and HCM Defender 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCM Defender 100 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 Quality are associated (or correlated) with HCM Defender. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCM Defender 100 has no effect on the direction of American Century i.e., American Century and HCM Defender go up and down completely randomly.
Pair Corralation between American Century and HCM Defender
Given the investment horizon of 90 days American Century Quality is expected to generate 0.75 times more return on investment than HCM Defender. However, American Century Quality is 1.33 times less risky than HCM Defender. It trades about 0.37 of its potential returns per unit of risk. HCM Defender 100 is currently generating about 0.04 per unit of risk. If you would invest 9,321 in American Century Quality on August 30, 2024 and sell it today you would earn a total of 964.00 from holding American Century Quality or generate 10.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Century Quality vs. HCM Defender 100
Performance |
| Timeline |
| American Century Quality |
| HCM Defender 100 |
American Century and HCM Defender Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and HCM Defender
The main advantage of trading using opposite American Century and HCM Defender positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, HCM Defender 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 HCM Defender will offset losses from the drop in HCM Defender's long position.| 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 |
| HCM Defender vs. HCM Defender 500 | HCM Defender vs. Xtrackers SP 500 | HCM Defender vs. Pacer Trendpilot 100 | HCM Defender vs. American Century Quality |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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