Correlation Between State Street and American Century
Can any of the company-specific risk be diversified away by investing in both State Street 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 State Street and American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Master and American Century High, you can compare the effects of market volatilities on State Street 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 State Street with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and American Century.
Diversification Opportunities for State Street and American Century
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between State and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding State Street Master and American Century High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century High and State Street 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 State Street Master 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 High has no effect on the direction of State Street i.e., State Street and American Century go up and down completely randomly.
Pair Corralation between State Street and American Century
Assuming the 90 days horizon State Street is expected to generate 2.21 times less return on investment than American Century. In addition to that, State Street is 1.89 times more volatile than American Century High. It trades about 0.03 of its total potential returns per unit of risk. American Century High is currently generating about 0.13 per unit of volatility. If you would invest 717.00 in American Century High on September 3, 2024 and sell it today you would earn a total of 157.00 from holding American Century High or generate 21.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 98.61% |
| Values | Daily Returns |
State Street Master vs. American Century High
Performance |
| Timeline |
| State Street Master |
| American Century High |
State Street and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and American Century
The main advantage of trading using opposite State Street and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street 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.| State Street vs. Salient Mlp Energy | State Street vs. Jennison Natural Resources | State Street vs. Dreyfus Natural Resources | State Street vs. Oil Gas Ultrasector |
| American Century vs. Transamerica Emerging Markets | American Century vs. T Rowe Price | American Century vs. Growth Strategy Fund | American Century vs. Ep Emerging Markets |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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