Correlation Between Americafirst Defensive and Americafirst Large
Can any of the company-specific risk be diversified away by investing in both Americafirst Defensive and Americafirst Large 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 Americafirst Defensive and Americafirst Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Americafirst Defensive Growth and Americafirst Large Cap, you can compare the effects of market volatilities on Americafirst Defensive and Americafirst Large 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 Americafirst Defensive with a short position of Americafirst Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Americafirst Defensive and Americafirst Large.
Diversification Opportunities for Americafirst Defensive and Americafirst Large
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Americafirst and Americafirst is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Americafirst Defensive Growth and Americafirst Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americafirst Large Cap and Americafirst Defensive 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 Americafirst Defensive Growth are associated (or correlated) with Americafirst Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americafirst Large Cap has no effect on the direction of Americafirst Defensive i.e., Americafirst Defensive and Americafirst Large go up and down completely randomly.
Pair Corralation between Americafirst Defensive and Americafirst Large
Assuming the 90 days horizon Americafirst Defensive is expected to generate 13.01 times less return on investment than Americafirst Large. But when comparing it to its historical volatility, Americafirst Defensive Growth is 4.3 times less risky than Americafirst Large. It trades about 0.11 of its potential returns per unit of risk. Americafirst Large Cap is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 1,357 in Americafirst Large Cap on August 30, 2024 and sell it today you would earn a total of 107.00 from holding Americafirst Large Cap or generate 7.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Americafirst Defensive Growth vs. Americafirst Large Cap
Performance |
| Timeline |
| Americafirst Defensive |
| Americafirst Large Cap |
Americafirst Defensive and Americafirst Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Americafirst Defensive and Americafirst Large
The main advantage of trading using opposite Americafirst Defensive and Americafirst Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Americafirst Defensive position performs unexpectedly, Americafirst Large 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 Americafirst Large will offset losses from the drop in Americafirst Large's long position.The idea behind Americafirst Defensive Growth and Americafirst Large Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Americafirst Large vs. Americafirst Large Cap | Americafirst Large vs. Americafirst Monthly Risk On | Americafirst Large vs. Americafirst Tactical Alpha | Americafirst Large vs. Americafirst Tactical Alpha |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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