Correlation Between American Century and 1290 Funds

Can any of the company-specific risk be diversified away by investing in both American Century and 1290 Funds 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 1290 Funds 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 1290 Funds , you can compare the effects of market volatilities on American Century and 1290 Funds 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 1290 Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and 1290 Funds.

Diversification Opportunities for American Century and 1290 Funds

0.45

Correlation Coefficient

American Century  1290 Funds

Very weak diversification

The 3 months correlation between American and 1290 is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding American Century Etf and 1290 Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1290 Funds 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 1290 Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1290 Funds has no effect on the direction of American Century i.e., American Century and 1290 Funds go up and down completely randomly.

Pair Corralation between American Century and 1290 Funds

Assuming the 90 days horizon American Century Etf is expected to under-perform the 1290 Funds. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Century Etf is 1.01 times less risky than 1290 Funds. The mutual fund trades about -0.02 of its potential returns per unit of risk. The 1290 Funds is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,189  in 1290 Funds on October 10, 2024 and sell it today you would earn a total of  128.00  from holding 1290 Funds or generate 10.77% return on investment over 90 days.

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

American Century Etf  vs.  1290 Funds

American Century Etf

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Century Etf has generated negative risk-adjusted returns adding no value to fund investors. 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.

1290 Funds

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 1290 Funds are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, 1290 Funds may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with American Century and 1290 Funds

The main advantage of trading using opposite American Century and 1290 Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, 1290 Funds 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 1290 Funds will offset losses from the drop in 1290 Funds' long position.

The idea behind American Century Etf and 1290 Funds 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.