Correlation Between Aam Select and Northern Small
Can any of the company-specific risk be diversified away by investing in both Aam Select and Northern Small 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 Northern Small 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 Northern Small Cap, you can compare the effects of market volatilities on Aam Select and Northern Small 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 Northern Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aam Select and Northern Small.
Diversification Opportunities for Aam Select and Northern Small
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aam and Northern is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Aam Select Income and Northern Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Small Cap 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 Northern Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Small Cap has no effect on the direction of Aam Select i.e., Aam Select and Northern Small go up and down completely randomly.
Pair Corralation between Aam Select and Northern Small
Assuming the 90 days horizon Aam Select Income is expected to generate 0.28 times more return on investment than Northern Small. However, Aam Select Income is 3.59 times less risky than Northern Small. It trades about 0.14 of its potential returns per unit of risk. Northern Small Cap is currently generating about 0.02 per unit of risk. If you would invest 921.00 in Aam Select Income on September 13, 2024 and sell it today you would earn a total of 8.00 from holding Aam Select Income or generate 0.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aam Select Income vs. Northern Small Cap
Performance |
| Timeline |
| Aam Select Income |
| Northern Small Cap |
Aam Select and Northern Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aam Select and Northern Small
The main advantage of trading using opposite Aam Select and Northern Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aam Select position performs unexpectedly, Northern Small 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 Northern Small will offset losses from the drop in Northern Small's long position.| Aam Select vs. Aamhimco Short Duration | Aam Select vs. Aamhimco Short Duration | Aam Select vs. Aamhimco Short Duration | Aam Select vs. Aambahl Gaynor Income |
| Northern Small vs. Northern Bond Index | Northern Small vs. Northern E Bond | Northern Small vs. Northern Arizona Tax Exempt | Northern Small vs. Northern Emerging Markets |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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