Correlation Between American Century and Us Government
Can any of the company-specific risk be diversified away by investing in both American Century and Us Government 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 Us Government 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 Us Government Securities, you can compare the effects of market volatilities on American Century and Us Government 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 Us Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Us Government.
Diversification Opportunities for American Century and Us Government
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and UGSDX is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding American Century Etf and Us Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Government Securities 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 Us Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Government Securities has no effect on the direction of American Century i.e., American Century and Us Government go up and down completely randomly.
Pair Corralation between American Century and Us Government
Assuming the 90 days horizon American Century Etf is expected to generate 19.65 times more return on investment than Us Government. However, American Century is 19.65 times more volatile than Us Government Securities. It trades about 0.2 of its potential returns per unit of risk. Us Government Securities is currently generating about 0.18 per unit of risk. If you would invest 1,373 in American Century Etf on April 7, 2025 and sell it today you would earn a total of 337.00 from holding American Century Etf or generate 24.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Century Etf vs. Us Government Securities
Performance |
| Timeline |
| American Century Etf |
| Us Government Securities |
American Century and Us Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and Us Government
The main advantage of trading using opposite American Century and Us Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, Us Government 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 Us Government will offset losses from the drop in Us Government's long position.| American Century vs. Federated Government Income | American Century vs. Voya Government Money | American Century vs. Dreyfus Government Cash | American Century vs. Us Government Securities |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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