Correlation Between Ultra Fund and American Century
Can any of the company-specific risk be diversified away by investing in both Ultra Fund 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 Ultra Fund and American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ultra Fund I and American Century Focused, you can compare the effects of market volatilities on Ultra Fund 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 Ultra Fund with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Fund and American Century.
Diversification Opportunities for Ultra Fund and American Century
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ultra and American is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Fund I 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 Ultra Fund 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 Ultra Fund I 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 Ultra Fund i.e., Ultra Fund and American Century go up and down completely randomly.
Pair Corralation between Ultra Fund and American Century
Assuming the 90 days horizon Ultra Fund I is expected to generate 1.11 times more return on investment than American Century. However, Ultra Fund is 1.11 times more volatile than American Century Focused. It trades about 0.2 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 9,398 in Ultra Fund I on September 12, 2024 and sell it today you would earn a total of 1,165 from holding Ultra Fund I or generate 12.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Ultra Fund I vs. American Century Focused
Performance |
| Timeline |
| Ultra Fund I |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| American Century Focused |
Ultra Fund and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Fund and American Century
The main advantage of trading using opposite Ultra Fund and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Fund 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.The idea behind Ultra Fund I and American Century Focused pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| American Century vs. Live Oak Health | American Century vs. Blackrock Health Sciences | American Century vs. Delaware Healthcare Fund | American Century vs. Eventide Healthcare Life |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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