Correlation Between Amana Income and Amana Participation
Can any of the company-specific risk be diversified away by investing in both Amana Income and Amana Participation 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 Amana Income and Amana Participation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amana Income Fund and Amana Participation Fund, you can compare the effects of market volatilities on Amana Income and Amana Participation 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 Amana Income with a short position of Amana Participation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amana Income and Amana Participation.
Diversification Opportunities for Amana Income and Amana Participation
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Amana and Amana is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Amana Income Fund and Amana Participation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amana Participation and Amana 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 Amana Income Fund are associated (or correlated) with Amana Participation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amana Participation has no effect on the direction of Amana Income i.e., Amana Income and Amana Participation go up and down completely randomly.
Pair Corralation between Amana Income and Amana Participation
Assuming the 90 days horizon Amana Income Fund is expected to generate 4.99 times more return on investment than Amana Participation. However, Amana Income is 4.99 times more volatile than Amana Participation Fund. It trades about 0.23 of its potential returns per unit of risk. Amana Participation Fund is currently generating about 0.04 per unit of risk. If you would invest 6,740 in Amana Income Fund on September 5, 2024 and sell it today you would earn a total of 201.00 from holding Amana Income Fund or generate 2.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Amana Income Fund vs. Amana Participation Fund
Performance |
| Timeline |
| Amana Income |
| Amana Participation |
Amana Income and Amana Participation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amana Income and Amana Participation
The main advantage of trading using opposite Amana Income and Amana Participation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amana Income position performs unexpectedly, Amana Participation 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 Amana Participation will offset losses from the drop in Amana Participation's long position.| Amana Income vs. Amana Growth Fund | Amana Income vs. Amana Developing World | Amana Income vs. Amana Developing World | Amana Income vs. Amana Income Fund |
| Amana Participation vs. Amana Developing World | Amana Participation vs. Amana Growth Fund | Amana Participation vs. Amana Developing World | Amana Participation vs. Amana Income Fund |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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