Correlation Between SPDR Barclays and American Century
Can any of the company-specific risk be diversified away by investing in both SPDR Barclays 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 SPDR Barclays and American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Barclays Intermediate and American Century Diversified, you can compare the effects of market volatilities on SPDR Barclays 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 SPDR Barclays with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Barclays and American Century.
Diversification Opportunities for SPDR Barclays and American Century
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and American is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Barclays Intermediate and American Century Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century Div and SPDR Barclays 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 SPDR Barclays Intermediate 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 Div has no effect on the direction of SPDR Barclays i.e., SPDR Barclays and American Century go up and down completely randomly.
Pair Corralation between SPDR Barclays and American Century
Given the investment horizon of 90 days SPDR Barclays Intermediate is expected to generate 0.72 times more return on investment than American Century. However, SPDR Barclays Intermediate is 1.39 times less risky than American Century. It trades about -0.18 of its potential returns per unit of risk. American Century Diversified is currently generating about -0.19 per unit of risk. If you would invest 3,250 in SPDR Barclays Intermediate on January 26, 2024 and sell it today you would lose (35.00) from holding SPDR Barclays Intermediate or give up 1.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Barclays Intermediate vs. American Century Diversified
Performance |
| Timeline |
| SPDR Barclays Interm |
| American Century Div |
SPDR Barclays and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Barclays and American Century
The main advantage of trading using opposite SPDR Barclays and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Barclays 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.| SPDR Barclays vs. iShares iBoxx High | SPDR Barclays vs. iShares 1 3 Year | SPDR Barclays vs. iShares TIPS Bond | SPDR Barclays vs. iShares 7 10 Year |
| American Century vs. iShares Edge Investment | American Century vs. American Century STOXX | American Century vs. Natixis Loomis Sayles | American Century vs. iShares Inflation Hedged |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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