Correlation Between American Century and Athena Value

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

By analyzing existing cross correlation between American Century One and Athena Value Fund, you can compare the effects of market volatilities on American Century and Athena Value 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 Athena Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Athena Value.

Diversification Opportunities for American Century and Athena Value

0.91

Correlation Coefficient

American Century  Athena Value

Almost no diversification

The 3 months correlation between American and Athena is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding American Century One and Athena Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athena Value 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 One are associated (or correlated) with Athena Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athena Value has no effect on the direction of American Century i.e., American Century and Athena Value go up and down completely randomly.

Pair Corralation between American Century and Athena Value

Assuming the 90 days horizon American Century One is expected to generate 0.66 times more return on investment than Athena Value. However, American Century One is 1.52 times less risky than Athena Value. It trades about 0.02 of its potential returns per unit of risk. Athena Value Fund is currently generating about 0.0 per unit of risk. If you would invest  897.00  in American Century One on January 24, 2024 and sell it today you would earn a total of  53.00  from holding American Century One or generate 5.91% return on investment over 90 days.

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

American Century One  vs.  Athena Value Fund

American Century One

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in American Century One are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, American Century is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Athena Value

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with American Century and Athena Value

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

The idea behind American Century One and Athena Value Fund 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.