Correlation Between Select Fund and American Century

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

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

Diversification Opportunities for Select Fund and American Century

-0.77

Correlation Coefficient

Select Fund  American Century

Pay attention - limited upside

The 3 months correlation between Select and American is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Select Fund Investor and American Century Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century Short and Select Fund 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 Select Fund Investor 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 Short has no effect on the direction of Select Fund i.e., Select Fund and American Century go up and down completely randomly.

Pair Corralation between Select Fund and American Century

Assuming the 90 days horizon Select Fund Investor is expected to under-perform the American Century. In addition to that, Select Fund is 15.63 times more volatile than American Century Short. It trades about -0.13 of its total potential returns per unit of risk. American Century Short is currently generating about 0.13 per unit of volatility. If you would invest  965.00  in American Century Short on January 23, 2025 and sell it today you would earn a total of  12.00  from holding American Century Short or generate 1.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Select Fund Investor  vs.  American Century Short

Select Fund Investor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Select Fund Investor has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

American Century Short

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Century Short are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, American Century is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Select Fund and American Century

The main advantage of trading using opposite Select Fund and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Fund 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 Select Fund Investor and American Century Short 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.