Correlation Between OBP Capital and American Century

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

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

Diversification Opportunities for OBP Capital and American Century

0.04

Correlation Coefficient

OBP Capital  American Century

Significant diversification

The 3 months correlation between OBP and American is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding OBP Capital 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 OBP Capital 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 OBP Capital 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 OBP Capital i.e., OBP Capital and American Century go up and down completely randomly.

Pair Corralation between OBP Capital and American Century

Given the investment horizon of 90 days OBP Capital is expected to generate 10.08 times less return on investment than American Century. But when comparing it to its historical volatility, OBP Capital is 1.62 times less risky than American Century. It trades about 0.01 of its potential returns per unit of risk. American Century ETF is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4,861  in American Century ETF on September 20, 2024 and sell it today you would earn a total of  1,767  from holding American Century ETF or generate 36.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	25.05%
Values	Daily Returns

OBP Capital  vs.  American Century ETF

OBP Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OBP Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, OBP Capital is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

American Century ETF

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in American Century ETF are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable essential indicators, American Century is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with OBP Capital and American Century

The main advantage of trading using opposite OBP Capital and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OBP Capital 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 OBP Capital 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.