Correlation Between Aama Equity and Aama Income
Can any of the company-specific risk be diversified away by investing in both Aama Equity and Aama Income 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 Aama Equity and Aama Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aama Equity Fund and Aama Income Fund, you can compare the effects of market volatilities on Aama Equity and Aama Income 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 Aama Equity with a short position of Aama Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aama Equity and Aama Income.
Diversification Opportunities for Aama Equity and Aama Income
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aama and Aama is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Aama Equity Fund and Aama Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aama Income Fund and Aama Equity 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 Aama Equity Fund are associated (or correlated) with Aama Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aama Income Fund has no effect on the direction of Aama Equity i.e., Aama Equity and Aama Income go up and down completely randomly.
Pair Corralation between Aama Equity and Aama Income
Assuming the 90 days horizon Aama Equity Fund is expected to generate 7.07 times more return on investment than Aama Income. However, Aama Equity is 7.07 times more volatile than Aama Income Fund. It trades about 0.14 of its potential returns per unit of risk. Aama Income Fund is currently generating about 0.18 per unit of risk. If you would invest 1,628 in Aama Equity Fund on August 27, 2024 and sell it today you would earn a total of 386.00 from holding Aama Equity Fund or generate 23.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aama Equity Fund vs. Aama Income Fund
Performance |
| Timeline |
| Aama Equity Fund |
| Aama Income Fund |
Aama Equity and Aama Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aama Equity and Aama Income
The main advantage of trading using opposite Aama Equity and Aama Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aama Equity position performs unexpectedly, Aama Income 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 Aama Income will offset losses from the drop in Aama Income's long position.| Aama Equity vs. Chartwell Small Cap | Aama Equity vs. Ab Small Cap | Aama Equity vs. M3sixty Capital Small | Aama Equity vs. Ancorathelen Small Mid Cap |
| Aama Income vs. Mid Cap Value Profund | Aama Income vs. Fpa Queens Road | Aama Income vs. Hennessy Nerstone Mid | Aama Income vs. Columbia Small Cap |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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