Correlation Between Avantis Short-term and American Century

Can any of the company-specific risk be diversified away by investing in both Avantis Short-term 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 Avantis Short-term and American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Avantis Short Term Fixed and American Century Etf, you can compare the effects of market volatilities on Avantis Short-term 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 Avantis Short-term with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis Short-term and American Century.

Diversification Opportunities for Avantis Short-term and American Century

-0.58

Correlation Coefficient

Avantis Short-term  American Century

Excellent diversification

The 3 months correlation between Avantis and American is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Short Term Fixed and American Century Etf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century Etf and Avantis Short-term 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 Avantis Short Term Fixed 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 Etf has no effect on the direction of Avantis Short-term i.e., Avantis Short-term and American Century go up and down completely randomly.

Pair Corralation between Avantis Short-term and American Century

Assuming the 90 days horizon Avantis Short-term is expected to generate 33.82 times less return on investment than American Century. But when comparing it to its historical volatility, Avantis Short Term Fixed is 7.98 times less risky than American Century. It trades about 0.08 of its potential returns per unit of risk. American Century Etf is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  1,420  in American Century Etf on September 5, 2024 and sell it today you would earn a total of  109.00  from holding American Century Etf or generate 7.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Avantis Short Term Fixed  vs.  American Century Etf

Avantis Short Term

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avantis Short Term Fixed has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Avantis Short-term is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

American Century Etf

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in American Century Etf are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, American Century may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Avantis Short-term and American Century

The main advantage of trading using opposite Avantis Short-term and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis Short-term 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 Avantis Short Term Fixed and American Century Etf 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.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.