Correlation Between Aam Select and World Energy
Can any of the company-specific risk be diversified away by investing in both Aam Select and World Energy 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 Aam Select and World Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aam Select Income and World Energy Fund, you can compare the effects of market volatilities on Aam Select and World Energy 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 Aam Select with a short position of World Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aam Select and World Energy.
Diversification Opportunities for Aam Select and World Energy
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Aam and World is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Aam Select Income and World Energy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Energy and Aam Select 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 Aam Select Income are associated (or correlated) with World Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Energy has no effect on the direction of Aam Select i.e., Aam Select and World Energy go up and down completely randomly.
Pair Corralation between Aam Select and World Energy
Assuming the 90 days horizon Aam Select is expected to generate 1.99 times less return on investment than World Energy. But when comparing it to its historical volatility, Aam Select Income is 2.94 times less risky than World Energy. It trades about 0.07 of its potential returns per unit of risk. World Energy Fund is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,256 in World Energy Fund on September 12, 2024 and sell it today you would earn a total of 213.00 from holding World Energy Fund or generate 16.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aam Select Income vs. World Energy Fund
Performance |
| Timeline |
| Aam Select Income |
| World Energy |
Aam Select and World Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aam Select and World Energy
The main advantage of trading using opposite Aam Select and World Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aam Select position performs unexpectedly, World Energy 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 World Energy will offset losses from the drop in World Energy's long position.| Aam Select vs. Guggenheim Diversified Income | Aam Select vs. Federated Hermes Conservative | Aam Select vs. Global Diversified Income | Aam Select vs. Jpmorgan Diversified Fund |
| World Energy vs. Aam Select Income | World Energy vs. Arrow Managed Futures | World Energy vs. Rbc Microcap Value | World Energy vs. Volumetric Fund Volumetric |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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