Correlation Between American Century and Basic Materials

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both American Century and Basic Materials 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 Basic Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Century Etf and Basic Materials Ultrasector, you can compare the effects of market volatilities on American Century and Basic Materials 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 Basic Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Basic Materials.

Diversification Opportunities for American Century and Basic Materials

AmericanBasicDiversified AwayAmericanBasicDiversified Away100%
0.47
  Correlation Coefficient

Very weak diversification

The 3 months correlation between American and Basic is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding American Century Etf and Basic Materials Ultrasector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basic Materials Ultr 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 Etf are associated (or correlated) with Basic Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basic Materials Ultr has no effect on the direction of American Century i.e., American Century and Basic Materials go up and down completely randomly.

Pair Corralation between American Century and Basic Materials

Assuming the 90 days horizon American Century Etf is expected to generate 1.07 times more return on investment than Basic Materials. However, American Century is 1.07 times more volatile than Basic Materials Ultrasector. It trades about 0.02 of its potential returns per unit of risk. Basic Materials Ultrasector is currently generating about -0.17 per unit of risk. If you would invest  1,743  in American Century Etf on October 20, 2024 and sell it today you would earn a total of  13.00  from holding American Century Etf or generate 0.75% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

American Century Etf  vs.  Basic Materials Ultrasector

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -20-15-10-50510
JavaScript chart by amCharts 3.21.15AVCNX BMPIX
       Timeline  
American Century Etf 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in American Century Etf are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, American Century is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan1717.51818.519
Basic Materials Ultr 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Basic Materials Ultrasector has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan100105110115120125

American Century and Basic Materials Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.57-3.42-2.27-1.130.01.142.313.474.63 0.050.100.150.20
JavaScript chart by amCharts 3.21.15AVCNX BMPIX
       Returns  

Pair Trading with American Century and Basic Materials

The main advantage of trading using opposite American Century and Basic Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, Basic Materials 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 Basic Materials will offset losses from the drop in Basic Materials' long position.
The idea behind American Century Etf and Basic Materials Ultrasector 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

Other Complementary Tools

Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
ETF Categories
List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments