Correlation Between VIIX and American Century

Can any of the company-specific risk be diversified away by investing in both VIIX and American Century 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 VIIX and American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VIIX and American Century ETF, you can compare the effects of market volatilities on VIIX and American Century 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 VIIX with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIIX and American Century.

Diversification Opportunities for VIIX and American Century

0.0

Correlation Coefficient

VIIX  American Century

Pay attention - limited upside

The 3 months correlation between VIIX and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding VIIX and American Century ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century ETF and VIIX 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 VIIX are associated (or correlated) with American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century ETF has no effect on the direction of VIIX i.e., VIIX and American Century go up and down completely randomly.

Pair Corralation between VIIX and American Century

If you would invest  5,018  in American Century ETF on December 28, 2024 and sell it today you would earn a total of  54.00  from holding American Century ETF or generate 1.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

VIIX  vs.  American Century ETF

VIIX

Risk-Adjusted Performance

Very Weak

Over the last 90 days VIIX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, VIIX is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

American Century ETF

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in American Century ETF are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, American Century is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with VIIX and American Century

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

The idea behind VIIX and American Century ETF 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.