Correlation Between American Century and FitLife Brands

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Can any of the company-specific risk be diversified away by investing in both American Century and FitLife Brands 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 FitLife Brands 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 FitLife Brands Common, you can compare the effects of market volatilities on American Century and FitLife Brands 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 FitLife Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and FitLife Brands.

Diversification Opportunities for American Century and FitLife Brands

0.55
  Correlation Coefficient

Very weak diversification

The 3 months correlation between American and FitLife is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding American Century One and FitLife Brands Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FitLife Brands Common 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 FitLife Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FitLife Brands Common has no effect on the direction of American Century i.e., American Century and FitLife Brands go up and down completely randomly.

Pair Corralation between American Century and FitLife Brands

Assuming the 90 days horizon American Century is expected to generate 3.17 times less return on investment than FitLife Brands. But when comparing it to its historical volatility, American Century One is 6.75 times less risky than FitLife Brands. It trades about 0.35 of its potential returns per unit of risk. FitLife Brands Common is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,243  in FitLife Brands Common on December 29, 2023 and sell it today you would earn a total of  137.00  from holding FitLife Brands Common or generate 6.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.65%
ValuesDaily Returns

American Century One  vs.  FitLife Brands Common

 Performance 
       Timeline  
American Century One 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in American Century One 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.
FitLife Brands Common 

Risk-Adjusted Performance

13 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in FitLife Brands Common are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting essential indicators, FitLife Brands reported solid returns over the last few months and may actually be approaching a breakup point.

American Century and FitLife Brands Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Century and FitLife Brands

The main advantage of trading using opposite American Century and FitLife Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, FitLife Brands 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 FitLife Brands will offset losses from the drop in FitLife Brands' long position.
The idea behind American Century One and FitLife Brands Common 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.
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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