Correlation Between SPDR Barclays and American Century
Can any of the company-specific risk be diversified away by investing in both SPDR Barclays 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 Barclays 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 Barclays Intermediate and American Century Diversified, you can compare the effects of market volatilities on SPDR Barclays 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 Barclays with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Barclays and American Century.
Diversification Opportunities for SPDR Barclays and American Century
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and American is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Barclays Intermediate and American Century Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century Div and SPDR Barclays 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 Barclays Intermediate 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 Div has no effect on the direction of SPDR Barclays i.e., SPDR Barclays and American Century go up and down completely randomly.
Pair Corralation between SPDR Barclays and American Century
Given the investment horizon of 90 days SPDR Barclays is expected to generate 1.02 times less return on investment than American Century. But when comparing it to its historical volatility, SPDR Barclays Intermediate is 1.21 times less risky than American Century. It trades about 0.08 of its potential returns per unit of risk. American Century Diversified is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,177 in American Century Diversified on August 24, 2024 and sell it today you would earn a total of 465.00 from holding American Century Diversified or generate 11.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Barclays Intermediate vs. American Century Diversified
Performance |
| Timeline |
| SPDR Barclays Interm |
| American Century Div |
SPDR Barclays and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Barclays and American Century
The main advantage of trading using opposite SPDR Barclays and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Barclays 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 Barclays vs. SPDR Barclays Short | SPDR Barclays vs. SPDR Bloomberg Emerging | SPDR Barclays vs. SPDR Barclays Long | SPDR Barclays vs. SPDR Barclays Short |
| American Century vs. SPDR Barclays Short | American Century vs. SPDR Bloomberg Emerging | American Century vs. SPDR Barclays Long | American Century vs. SPDR Barclays Short |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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