Correlation Between Federated Short-term and American Century

Can any of the company-specific risk be diversified away by investing in both Federated 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 Federated 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 Federated Short Term Income and American Century Etf, you can compare the effects of market volatilities on Federated 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 Federated Short-term with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Short-term and American Century.

Diversification Opportunities for Federated Short-term and American Century

-0.27

Correlation Coefficient

Federated Short-term  American Century

Very good diversification

The 3 months correlation between Federated and American is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Federated Short Term Income 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 Federated 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 Federated Short Term Income 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 Federated Short-term i.e., Federated Short-term and American Century go up and down completely randomly.

Pair Corralation between Federated Short-term and American Century

Assuming the 90 days horizon Federated Short-term is expected to generate 115.37 times less return on investment than American Century. But when comparing it to its historical volatility, Federated Short Term Income is 11.3 times less risky than American Century. It trades about 0.02 of its potential returns per unit of risk. American Century Etf is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,694  in American Century Etf on September 4, 2024 and sell it today you would earn a total of  240.00  from holding American Century Etf or generate 14.17% return on investment over 90 days.

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

Federated Short Term Income  vs.  American Century Etf

Federated Short Term

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Short Term Income are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Federated 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

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Century Etf are ranked lower than 12 (%) 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.

Pair Trading with Federated Short-term and American Century

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

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.