Correlation Between American Century and Mid-cap Value

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

Diversification Opportunities for American Century and Mid-cap Value

0.99

Correlation Coefficient

American Century  Mid-cap Value

No risk reduction

The 3 months correlation between American and Mid-cap is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding American Century Etf and Mid Cap Value Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap Value 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 Mid-cap Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap Value has no effect on the direction of American Century i.e., American Century and Mid-cap Value go up and down completely randomly.

Pair Corralation between American Century and Mid-cap Value

Assuming the 90 days horizon American Century Etf is expected to generate 1.37 times more return on investment than Mid-cap Value. However, American Century is 1.37 times more volatile than Mid Cap Value Profund. It trades about 0.15 of its potential returns per unit of risk. Mid Cap Value Profund is currently generating about 0.18 per unit of risk. If you would invest  1,705  in American Century Etf on September 2, 2024 and sell it today you would earn a total of  229.00  from holding American Century Etf or generate 13.43% return on investment over 90 days.

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

American Century Etf  vs.  Mid Cap Value Profund

American Century Etf

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Century Etf are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, American Century showed solid returns over the last few months and may actually be approaching a breakup point.

Mid Cap Value

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap Value Profund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Mid-cap Value may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with American Century and Mid-cap Value

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

The idea behind American Century Etf and Mid Cap Value Profund 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 CEOs Directory module to screen CEOs from public companies around the world.