Correlation Between International Growth and American Century
Can any of the company-specific risk be diversified away by investing in both International Growth 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 International Growth and American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Growth Fund and American Century Focused, you can compare the effects of market volatilities on International Growth 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 International Growth with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Growth and American Century.
Diversification Opportunities for International Growth and American Century
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between International and American is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding International Growth Fund and American Century Focused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century Focused and International Growth 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 International Growth Fund 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 Focused has no effect on the direction of International Growth i.e., International Growth and American Century go up and down completely randomly.
Pair Corralation between International Growth and American Century
Assuming the 90 days horizon International Growth Fund is expected to generate 1.04 times more return on investment than American Century. However, International Growth is 1.04 times more volatile than American Century Focused. It trades about -0.02 of its potential returns per unit of risk. American Century Focused is currently generating about -0.04 per unit of risk. If you would invest 1,315 in International Growth Fund on September 12, 2024 and sell it today you would lose (19.00) from holding International Growth Fund or give up 1.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Growth Fund vs. American Century Focused
Performance |
| Timeline |
| International Growth |
| American Century Focused |
International Growth and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Growth and American Century
The main advantage of trading using opposite International Growth and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Growth 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.| International Growth vs. Value Fund Investor | International Growth vs. Ultra Fund Investor | International Growth vs. Growth Fund Investor | International Growth vs. Income Growth Fund |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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