Correlation Between American Century and Growth Income

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Can any of the company-specific risk be diversified away by investing in both American Century and Growth Income 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 Growth Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Century Etf and Growth Income Fund, you can compare the effects of market volatilities on American Century and Growth Income 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 Growth Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Growth Income.

Diversification Opportunities for American Century and Growth Income

0.94
  Correlation Coefficient

Almost no diversification

The 3 months correlation between American and Growth is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding American Century Etf and Growth Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Income 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 Etf are associated (or correlated) with Growth Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Income has no effect on the direction of American Century i.e., American Century and Growth Income go up and down completely randomly.

Pair Corralation between American Century and Growth Income

Assuming the 90 days horizon American Century Etf is expected to generate 1.95 times more return on investment than Growth Income. However, American Century is 1.95 times more volatile than Growth Income Fund. It trades about 0.19 of its potential returns per unit of risk. Growth Income Fund is currently generating about 0.3 per unit of risk. If you would invest  1,655  in American Century Etf on September 6, 2024 and sell it today you would earn a total of  271.00  from holding American Century Etf or generate 16.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy98.44%
ValuesDaily Returns

American Century Etf  vs.  Growth Income Fund

 Performance 
       Timeline  
American Century Etf 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in American Century Etf are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, American Century showed solid returns over the last few months and may actually be approaching a breakup point.
Growth Income 

Risk-Adjusted Performance

23 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Growth Income Fund are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly abnormal basic indicators, Growth Income showed solid returns over the last few months and may actually be approaching a breakup point.

American Century and Growth Income Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Century and Growth Income

The main advantage of trading using opposite American Century and Growth Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, Growth Income 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 Growth Income will offset losses from the drop in Growth Income's long position.
The idea behind American Century Etf and Growth Income Fund 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.
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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