Correlation Between Aam Select and Target 2005
Can any of the company-specific risk be diversified away by investing in both Aam Select and Target 2005 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 Target 2005 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 Target 2005 Fund, you can compare the effects of market volatilities on Aam Select and Target 2005 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 Target 2005. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aam Select and Target 2005.
Diversification Opportunities for Aam Select and Target 2005
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aam and Target is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Aam Select Income and Target 2005 Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target 2005 Fund 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 Target 2005. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target 2005 Fund has no effect on the direction of Aam Select i.e., Aam Select and Target 2005 go up and down completely randomly.
Pair Corralation between Aam Select and Target 2005
Assuming the 90 days horizon Aam Select is expected to generate 4.42 times less return on investment than Target 2005. In addition to that, Aam Select is 1.41 times more volatile than Target 2005 Fund. It trades about 0.03 of its total potential returns per unit of risk. Target 2005 Fund is currently generating about 0.17 per unit of volatility. If you would invest 1,168 in Target 2005 Fund on August 29, 2024 and sell it today you would earn a total of 12.00 from holding Target 2005 Fund or generate 1.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aam Select Income vs. Target 2005 Fund
Performance |
| Timeline |
| Aam Select Income |
| Target 2005 Fund |
Aam Select and Target 2005 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aam Select and Target 2005
The main advantage of trading using opposite Aam Select and Target 2005 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aam Select position performs unexpectedly, Target 2005 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 Target 2005 will offset losses from the drop in Target 2005's long position.| Aam Select vs. Massmutual Premier Funds | Aam Select vs. Morgan Stanley Government | Aam Select vs. T Rowe Price | Aam Select vs. Transamerica Funds |
| Target 2005 vs. Artisan Emerging Markets | Target 2005 vs. Limited Term Tax | Target 2005 vs. Fundvantage Trust | Target 2005 vs. Rationalpier 88 Convertible |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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