Correlation Between American Century and Hartford Healthcare
Can any of the company-specific risk be diversified away by investing in both American Century and Hartford Healthcare 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 Hartford Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Century Real and Hartford Healthcare Hls, you can compare the effects of market volatilities on American Century and Hartford Healthcare 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 Hartford Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Hartford Healthcare.
Diversification Opportunities for American Century and Hartford Healthcare
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and HARTFORD is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding American Century Real and Hartford Healthcare Hls in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Healthcare Hls 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 Real are associated (or correlated) with Hartford Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Healthcare Hls has no effect on the direction of American Century i.e., American Century and Hartford Healthcare go up and down completely randomly.
Pair Corralation between American Century and Hartford Healthcare
Assuming the 90 days horizon American Century Real is expected to generate 1.41 times more return on investment than Hartford Healthcare. However, American Century is 1.41 times more volatile than Hartford Healthcare Hls. It trades about 0.03 of its potential returns per unit of risk. Hartford Healthcare Hls is currently generating about 0.01 per unit of risk. If you would invest 2,418 in American Century Real on October 23, 2024 and sell it today you would earn a total of 269.00 from holding American Century Real or generate 11.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
American Century Real vs. Hartford Healthcare Hls
Performance |
| Timeline |
| American Century Real |
| Hartford Healthcare Hls |
American Century and Hartford Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and Hartford Healthcare
The main advantage of trading using opposite American Century and Hartford Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, Hartford Healthcare 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 Hartford Healthcare will offset losses from the drop in Hartford Healthcare's long position.| American Century vs. Small Pany Fund | American Century vs. Blackrock Glbl Sm | American Century vs. Small Cap Value | American Century vs. Emerging Markets Bond |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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