Correlation Between Absolute Convertible and American Independence
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible and American Independence 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 Absolute Convertible and American Independence into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and American Independence Kansas, you can compare the effects of market volatilities on Absolute Convertible and American Independence 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 Absolute Convertible with a short position of American Independence. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and American Independence.
Diversification Opportunities for Absolute Convertible and American Independence
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Absolute and American is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and American Independence Kansas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Independence and Absolute Convertible 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 Absolute Convertible Arbitrage are associated (or correlated) with American Independence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Independence has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and American Independence go up and down completely randomly.
Pair Corralation between Absolute Convertible and American Independence
Assuming the 90 days horizon Absolute Convertible is expected to generate 1.34 times less return on investment than American Independence. But when comparing it to its historical volatility, Absolute Convertible Arbitrage is 4.78 times less risky than American Independence. It trades about 0.49 of its potential returns per unit of risk. American Independence Kansas is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,005 in American Independence Kansas on August 25, 2024 and sell it today you would earn a total of 7.00 from holding American Independence Kansas or generate 0.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. American Independence Kansas
Performance |
| Timeline |
| Absolute Convertible |
| American Independence |
Absolute Convertible and American Independence Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and American Independence
The main advantage of trading using opposite Absolute Convertible and American Independence positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible position performs unexpectedly, American Independence 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 American Independence will offset losses from the drop in American Independence's long position.| Absolute Convertible vs. Absolute Capital Opportunities | Absolute Convertible vs. Invesco Small Cap | Absolute Convertible vs. Vanguard 500 Index | Absolute Convertible vs. Rivernorth Opportunities |
| American Independence vs. Mainstay Vertible Fund | American Independence vs. Absolute Convertible Arbitrage | American Independence vs. Lord Abbett Vertible | American Independence vs. Lord Abbett Vertible |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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