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 500 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
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SPDR and American is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 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 500 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
Considering the 90-day investment horizon SPDR SP 500 is expected to generate 4.99 times more return on investment than American Century. However, SPDR SP is 4.99 times more volatile than American Century ETF. It trades about 0.11 of its potential returns per unit of risk. American Century ETF is currently generating about 0.1 per unit of risk. If you would invest 38,815 in SPDR SP 500 on August 24, 2024 and sell it today you would earn a total of 20,552 from holding SPDR SP 500 or generate 52.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. American Century ETF
Performance |
| Timeline |
| SPDR SP 500 |
| 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 Nuveen Municipal | SPDR SP vs. SPDR SP 400 | SPDR SP vs. SPDR SP 400 | SPDR SP vs. SPDR SP 1500 |
| American Century vs. Avantis Core Fixed | American Century vs. Avantis Core Municipal | American Century vs. Avantis Emerging Markets | American Century vs. Avantis International Equity |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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