Correlation Between Aama Income and NYSE Composite
Can any of the company-specific risk be diversified away by investing in both Aama Income and NYSE Composite 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 Income and NYSE Composite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aama Income Fund and NYSE Composite, you can compare the effects of market volatilities on Aama Income and NYSE Composite 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 Income with a short position of NYSE Composite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aama Income and NYSE Composite.
Diversification Opportunities for Aama Income and NYSE Composite
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aama and NYSE is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Aama Income Fund and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite and Aama Income 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 Income Fund are associated (or correlated) with NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of Aama Income i.e., Aama Income and NYSE Composite go up and down completely randomly.
Pair Corralation between Aama Income and NYSE Composite
Assuming the 90 days horizon Aama Income is expected to generate 4.27 times less return on investment than NYSE Composite. But when comparing it to its historical volatility, Aama Income Fund is 8.55 times less risky than NYSE Composite. It trades about 0.19 of its potential returns per unit of risk. NYSE Composite is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,676,925 in NYSE Composite on October 20, 2024 and sell it today you would earn a total of 283,812 from holding NYSE Composite or generate 16.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aama Income Fund vs. NYSE Composite
Performance |
| Timeline |
Aama Income and NYSE Composite Volatility Contrast
Predicted Return Density |
| Returns |
Aama Income Fund
Pair trading matchups for Aama Income
NYSE Composite
Pair trading matchups for NYSE Composite
Pair Trading with Aama Income and NYSE Composite
The main advantage of trading using opposite Aama Income and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aama Income position performs unexpectedly, NYSE Composite 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 NYSE Composite will offset losses from the drop in NYSE Composite's long position.| Aama Income vs. Franklin Government Money | Aama Income vs. Dws Government Money | Aama Income vs. Versatile Bond Portfolio | Aama Income vs. Leader Short Term Bond |
| NYSE Composite vs. Hawkins | NYSE Composite vs. Codexis | NYSE Composite vs. NL Industries | NYSE Composite vs. CVR Partners LP |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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