Correlation Between American Century and Affinity World
Can any of the company-specific risk be diversified away by investing in both American Century and Affinity World 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 American Century and Affinity World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Century STOXX and Affinity World Leaders, you can compare the effects of market volatilities on American Century and Affinity World 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 American Century with a short position of Affinity World. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Affinity World.
Diversification Opportunities for American Century and Affinity World
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Affinity is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding American Century STOXX and Affinity World Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affinity World Leaders and American Century 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 American Century STOXX are associated (or correlated) with Affinity World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affinity World Leaders has no effect on the direction of American Century i.e., American Century and Affinity World go up and down completely randomly.
Pair Corralation between American Century and Affinity World
Given the investment horizon of 90 days American Century is expected to generate 1.34 times less return on investment than Affinity World. But when comparing it to its historical volatility, American Century STOXX is 1.51 times less risky than Affinity World. It trades about 0.12 of its potential returns per unit of risk. Affinity World Leaders is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,308 in Affinity World Leaders on August 30, 2024 and sell it today you would earn a total of 156.00 from holding Affinity World Leaders or generate 4.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Century STOXX vs. Affinity World Leaders
Performance |
| Timeline |
| American Century STOXX |
| Affinity World Leaders |
American Century and Affinity World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and Affinity World
The main advantage of trading using opposite American Century and Affinity World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, Affinity World 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 Affinity World will offset losses from the drop in Affinity World's long position.| American Century vs. American Century Quality | American Century vs. Invesco SP 500 | American Century vs. American Century Diversified | American Century vs. Invesco SP SmallCap |
| Affinity World vs. FCF International Quality | Affinity World vs. American Century STOXX | Affinity World vs. PIMCO RAFI Dynamic | Affinity World vs. ProShares SP 500 |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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