Correlation Between Aam Select and Aam/insight Select
Can any of the company-specific risk be diversified away by investing in both Aam Select and Aam/insight Select 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 Aam/insight Select 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 Aaminsight Select Income, you can compare the effects of market volatilities on Aam Select and Aam/insight Select 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 Aam/insight Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aam Select and Aam/insight Select.
Diversification Opportunities for Aam Select and Aam/insight Select
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Aam and Aam/insight is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Aam Select Income and Aaminsight Select Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aaminsight Select Income 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 Aam/insight Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aaminsight Select Income has no effect on the direction of Aam Select i.e., Aam Select and Aam/insight Select go up and down completely randomly.
Pair Corralation between Aam Select and Aam/insight Select
Assuming the 90 days horizon Aam Select is expected to generate 1.1 times less return on investment than Aam/insight Select. But when comparing it to its historical volatility, Aam Select Income is 1.0 times less risky than Aam/insight Select. It trades about 0.08 of its potential returns per unit of risk. Aaminsight Select Income is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 892.00 in Aaminsight Select Income on September 3, 2024 and sell it today you would earn a total of 35.00 from holding Aaminsight Select Income or generate 3.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aam Select Income vs. Aaminsight Select Income
Performance |
| Timeline |
| Aam Select Income |
| Aaminsight Select Income |
Aam Select and Aam/insight Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aam Select and Aam/insight Select
The main advantage of trading using opposite Aam Select and Aam/insight Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aam Select position performs unexpectedly, Aam/insight Select 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 Aam/insight Select will offset losses from the drop in Aam/insight Select's long position.| Aam Select vs. Needham Aggressive Growth | Aam Select vs. Western Asset High | Aam Select vs. Gmo High Yield | Aam Select vs. Nuveen High Income |
| Aam/insight Select vs. Kinetics Small Cap | Aam/insight Select vs. Fisher Small Cap | Aam/insight Select vs. Ancorathelen Small Mid Cap | Aam/insight Select vs. Champlain Small |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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