Correlation Between Vanguard Growth and American Century
Can any of the company-specific risk be diversified away by investing in both Vanguard 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 Vanguard 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 Vanguard Growth Index and American Century Sustainable, you can compare the effects of market volatilities on Vanguard 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 Vanguard Growth with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Growth and American Century.
Diversification Opportunities for Vanguard Growth and American Century
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and American is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Index and American Century Sustainable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century Sus and Vanguard 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 Vanguard Growth Index 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 Sus has no effect on the direction of Vanguard Growth i.e., Vanguard Growth and American Century go up and down completely randomly.
Pair Corralation between Vanguard Growth and American Century
Considering the 90-day investment horizon Vanguard Growth Index is expected to generate 1.03 times more return on investment than American Century. However, Vanguard Growth is 1.03 times more volatile than American Century Sustainable. It trades about 0.11 of its potential returns per unit of risk. American Century Sustainable is currently generating about 0.1 per unit of risk. If you would invest 28,761 in Vanguard Growth Index on August 29, 2024 and sell it today you would earn a total of 11,811 from holding Vanguard Growth Index or generate 41.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Growth Index vs. American Century Sustainable
Performance |
| Timeline |
| Vanguard Growth Index |
| American Century Sus |
Vanguard Growth and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Growth and American Century
The main advantage of trading using opposite Vanguard Growth and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 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.| Vanguard Growth vs. Vanguard Value Index | Vanguard Growth vs. Vanguard Information Technology | Vanguard Growth vs. Vanguard Small Cap Growth | Vanguard Growth vs. Vanguard Dividend Appreciation |
| American Century vs. American Century Sustainable | American Century vs. IndexIQ Active ETF | American Century vs. FlexShares STOXX Global | American Century vs. Putnam Focused Large |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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