Correlation Between American Century and ProShares
Can any of the company-specific risk be diversified away by investing in both American Century and ProShares 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 ProShares 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 ProShares SP 500, you can compare the effects of market volatilities on American Century and ProShares 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 ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and ProShares.
Diversification Opportunities for American Century and ProShares
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and ProShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding American Century Quality and ProShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP 500 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 ProShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares SP 500 has no effect on the direction of American Century i.e., American Century and ProShares go up and down completely randomly.
Pair Corralation between American Century and ProShares
Given the investment horizon of 90 days American Century Quality is expected to generate 1.19 times more return on investment than ProShares. However, American Century is 1.19 times more volatile than ProShares SP 500. It trades about 0.13 of its potential returns per unit of risk. ProShares SP 500 is currently generating about 0.13 per unit of risk. If you would invest 5,723 in American Century Quality on September 16, 2024 and sell it today you would earn a total of 4,649 from holding American Century Quality or generate 81.23% 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. ProShares SP 500
Performance |
| Timeline |
| American Century Quality |
| ProShares SP 500 |
American Century and ProShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and ProShares
The main advantage of trading using opposite American Century and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, ProShares 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 ProShares will offset losses from the drop in ProShares' long position.| American Century vs. iShares Factors Growth | American Century vs. Absolute Core Strategy | American Century vs. iShares ESG Advanced | American Century vs. PIMCO RAFI Dynamic |
| ProShares vs. Vanguard SP 500 | ProShares vs. Vanguard Real Estate | ProShares vs. Vanguard Total Bond | ProShares vs. Vanguard High Dividend |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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