Correlation Between Global X and American Century

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

By analyzing existing cross correlation between Global X Funds and American Century ETF, you can compare the effects of market volatilities on Global X 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 Global X with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and American Century.

Diversification Opportunities for Global X and American Century

-0.22

Correlation Coefficient

Global X  American Century

Very good diversification

The 3 months correlation between Global and American is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds 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 Global X 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 Global X Funds 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 Global X i.e., Global X and American Century go up and down completely randomly.

Pair Corralation between Global X and American Century

Considering the 90-day investment horizon Global X is expected to generate 3.92 times less return on investment than American Century. In addition to that, Global X is 1.22 times more volatile than American Century ETF. It trades about 0.05 of its total potential returns per unit of risk. American Century ETF is currently generating about 0.22 per unit of volatility. If you would invest  6,300  in American Century ETF on September 12, 2024 and sell it today you would earn a total of  704.00  from holding American Century ETF or generate 11.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Global X Funds  vs.  American Century ETF

Global X Funds

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Global X is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

American Century ETF

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in American Century ETF are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, American Century may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Global X and American Century

The main advantage of trading using opposite Global X and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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 Global X Funds 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.