Correlation Between American Century and First Investors

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

Diversification Opportunities for American Century and First Investors

0.77

Correlation Coefficient

American Century  First Investors

Poor diversification

The 3 months correlation between American and First is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding American Century Etf and First Investors Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Investors Select 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 First Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Investors Select has no effect on the direction of American Century i.e., American Century and First Investors go up and down completely randomly.

Pair Corralation between American Century and First Investors

Assuming the 90 days horizon American Century is expected to generate 1.57 times less return on investment than First Investors. In addition to that, American Century is 1.46 times more volatile than First Investors Select. It trades about 0.04 of its total potential returns per unit of risk. First Investors Select is currently generating about 0.09 per unit of volatility. If you would invest  893.00  in First Investors Select on October 11, 2024 and sell it today you would earn a total of  412.00  from holding First Investors Select or generate 46.14% return on investment over 90 days.

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

American Century Etf  vs.  First Investors Select

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.

First Investors Select

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Investors Select are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, First Investors is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with American Century and First Investors

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

The idea behind American Century Etf and First Investors Select 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.