Correlation Between Affinity World and American Century

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

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

Diversification Opportunities for Affinity World and American Century

0.96

Correlation Coefficient

Affinity World  American Century

Almost no diversification

The 3 months correlation between Affinity and American is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Affinity World Leaders 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 Affinity World 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 Affinity World Leaders 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 Affinity World i.e., Affinity World and American Century go up and down completely randomly.

Pair Corralation between Affinity World and American Century

Given the investment horizon of 90 days Affinity World Leaders is expected to generate 1.28 times more return on investment than American Century. However, Affinity World is 1.28 times more volatile than American Century ETF. It trades about 0.16 of its potential returns per unit of risk. American Century ETF is currently generating about 0.16 per unit of risk. If you would invest  3,167  in Affinity World Leaders on September 2, 2024 and sell it today you would earn a total of  327.00  from holding Affinity World Leaders or generate 10.33% return on investment over 90 days.

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

Affinity World Leaders  vs.  American Century ETF

Affinity World Leaders

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Affinity World Leaders are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile fundamental indicators, Affinity World may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, American Century may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Affinity World and American Century

The main advantage of trading using opposite Affinity World and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affinity World 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 Affinity World Leaders 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.