Correlation Between SPDR SP and American Century
Can any of the company-specific risk be diversified away by investing in both SPDR SP 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 SPDR SP and American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP World and American Century ETF, you can compare the effects of market volatilities on SPDR SP 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 SPDR SP with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and American Century.
Diversification Opportunities for SPDR SP and American Century
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and American is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP World and American Century ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century ETF and SPDR SP 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 SPDR SP World 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 ETF has no effect on the direction of SPDR SP i.e., SPDR SP and American Century go up and down completely randomly.
Pair Corralation between SPDR SP and American Century
Given the investment horizon of 90 days SPDR SP is expected to generate 1.1 times less return on investment than American Century. But when comparing it to its historical volatility, SPDR SP World is 1.01 times less risky than American Century. It trades about 0.01 of its potential returns per unit of risk. American Century ETF is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 5,708 in American Century ETF on September 1, 2024 and sell it today you would earn a total of 12.00 from holding American Century ETF or generate 0.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
SPDR SP World vs. American Century ETF
Performance |
| Timeline |
| SPDR SP World |
| American Century ETF |
SPDR SP and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and American Century
The main advantage of trading using opposite SPDR SP and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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.| SPDR SP vs. SPDR Portfolio Emerging | SPDR SP vs. SPDR Portfolio SP | SPDR SP vs. SPDR Portfolio SP | SPDR SP vs. SPDR Russell Small |
| American Century vs. EA Series Trust | American Century vs. Northern Lights | American Century vs. Northern Lights | American Century vs. Northern Lights |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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