Correlation Between Growth Strategy and American Century
Can any of the company-specific risk be diversified away by investing in both Growth Strategy 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 Growth Strategy and American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Strategy Fund and American Century One, you can compare the effects of market volatilities on Growth Strategy 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 Growth Strategy with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Strategy and American Century.
Diversification Opportunities for Growth Strategy and American Century
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GROWTH and American is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Growth Strategy Fund and American Century One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century One and Growth Strategy 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 Growth Strategy Fund 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 One has no effect on the direction of Growth Strategy i.e., Growth Strategy and American Century go up and down completely randomly.
Pair Corralation between Growth Strategy and American Century
Assuming the 90 days horizon Growth Strategy is expected to generate 1.32 times less return on investment than American Century. But when comparing it to its historical volatility, Growth Strategy Fund is 1.08 times less risky than American Century. It trades about 0.07 of its potential returns per unit of risk. American Century One is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 859.00 in American Century One on September 4, 2024 and sell it today you would earn a total of 313.00 from holding American Century One or generate 36.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Strategy Fund vs. American Century One
Performance |
| Timeline |
| Growth Strategy |
| American Century One |
Growth Strategy and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Strategy and American Century
The main advantage of trading using opposite Growth Strategy and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Strategy 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.| Growth Strategy vs. International Developed Markets | Growth Strategy vs. Global Real Estate | Growth Strategy vs. Global Real Estate | Growth Strategy vs. Global Real Estate |
| American Century vs. Rational Strategic Allocation | American Century vs. Qs Global Equity | American Century vs. Growth Strategy Fund | American Century vs. William Blair Large |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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