Correlation Between American Century and Western Asset
Can any of the company-specific risk be diversified away by investing in both American Century and Western Asset 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 Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Century High and Western Asset California, you can compare the effects of market volatilities on American Century and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Western Asset.
Diversification Opportunities for American Century and Western Asset
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Western is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding American Century High and Western Asset California in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset California 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 High are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset California has no effect on the direction of American Century i.e., American Century and Western Asset go up and down completely randomly.
Pair Corralation between American Century and Western Asset
Assuming the 90 days horizon American Century High is expected to generate 0.99 times more return on investment than Western Asset. However, American Century High is 1.01 times less risky than Western Asset. It trades about 0.09 of its potential returns per unit of risk. Western Asset California is currently generating about -0.03 per unit of risk. If you would invest 848.00 in American Century High on December 30, 2024 and sell it today you would earn a total of 11.00 from holding American Century High or generate 1.3% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
American Century High vs. Western Asset California
Performance |
Timeline |
American Century High |
Western Asset California |
American Century and Western Asset Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Century and Western Asset
The main advantage of trading using opposite American Century and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.American Century vs. Intal High Relative | American Century vs. Aqr Risk Parity | American Century vs. Gmo High Yield | American Century vs. John Hancock High |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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