Correlation Between Fabxx and American Independence
Can any of the company-specific risk be diversified away by investing in both Fabxx and American Independence 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 Fabxx and American Independence into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fabxx and American Independence Kansas, you can compare the effects of market volatilities on Fabxx and American Independence 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 Fabxx with a short position of American Independence. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fabxx and American Independence.
Diversification Opportunities for Fabxx and American Independence
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fabxx and American is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Fabxx and American Independence Kansas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Independence and Fabxx 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 Fabxx are associated (or correlated) with American Independence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Independence has no effect on the direction of Fabxx i.e., Fabxx and American Independence go up and down completely randomly.
Pair Corralation between Fabxx and American Independence
Assuming the 90 days horizon Fabxx is expected to under-perform the American Independence. In addition to that, Fabxx is 18.82 times more volatile than American Independence Kansas. It trades about -0.13 of its total potential returns per unit of risk. American Independence Kansas is currently generating about 0.22 per unit of volatility. If you would invest 1,008 in American Independence Kansas on September 1, 2024 and sell it today you would earn a total of 11.00 from holding American Independence Kansas or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Fabxx vs. American Independence Kansas
Performance |
| Timeline |
| Fabxx |
| American Independence |
Fabxx and American Independence Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fabxx and American Independence
The main advantage of trading using opposite Fabxx and American Independence positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fabxx position performs unexpectedly, American Independence 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 American Independence will offset losses from the drop in American Independence's long position.| Fabxx vs. Vanguard Financials Index | Fabxx vs. Blackrock Financial Institutions | Fabxx vs. Financials Ultrasector Profund | Fabxx vs. Mesirow Financial Small |
| American Independence vs. Scharf Global Opportunity | American Independence vs. Fabxx | American Independence vs. Qs Large Cap | American Independence vs. T Rowe Price |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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