Correlation Between Americafirst Defensive and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Americafirst Defensive and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Americafirst Defensive and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Americafirst Defensive and Dow Jones.
Diversification Opportunities for Americafirst Defensive and Dow Jones
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Americafirst and Dow is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Americafirst Defensive Growth and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Americafirst Defensive i.e., Americafirst Defensive and Dow Jones go up and down completely randomly.
Pair Corralation between Americafirst Defensive and Dow Jones
Assuming the 90 days horizon Americafirst Defensive Growth is expected to under-perform the Dow Jones. But the mutual fund apears to be less risky and, when comparing its historical volatility, Americafirst Defensive Growth is 1.85 times less risky than Dow Jones. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Dow Jones Industrial is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4,156,308 in Dow Jones Industrial on August 30, 2024 and sell it today you would earn a total of 315,898 from holding Dow Jones Industrial or generate 7.6% 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. Dow Jones Industrial
Performance |
| Timeline |
Americafirst Defensive and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Americafirst Defensive Growth
Pair trading matchups for Americafirst Defensive
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Americafirst Defensive and Dow Jones
The main advantage of trading using opposite Americafirst Defensive and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Americafirst Defensive position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Americafirst Defensive vs. James Balanced Golden | Americafirst Defensive vs. Fidelity Advisor Gold | Americafirst Defensive vs. International Investors Gold | Americafirst Defensive vs. Short Precious Metals |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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