Correlation Between FAM and New America
Can any of the company-specific risk be diversified away by investing in both FAM and New America 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 FAM and New America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FAM and New America High, you can compare the effects of market volatilities on FAM and New America 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 FAM with a short position of New America. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAM and New America.
Diversification Opportunities for FAM and New America
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between FAM and New is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding FAM and New America High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New America High and FAM 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 FAM are associated (or correlated) with New America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New America High has no effect on the direction of FAM i.e., FAM and New America go up and down completely randomly.
Pair Corralation between FAM and New America
If you would invest 813.00 in New America High on August 25, 2024 and sell it today you would earn a total of 14.00 from holding New America High or generate 1.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 4.35% |
| Values | Daily Returns |
FAM vs. New America High
Performance |
| Timeline |
| FAM |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| New America High |
FAM and New America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAM and New America
The main advantage of trading using opposite FAM and New America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAM position performs unexpectedly, New America 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 New America will offset losses from the drop in New America's long position.| FAM vs. MFS Investment Grade | FAM vs. Invesco High Income | FAM vs. Eaton Vance National | FAM vs. Nuveen California Select |
| New America vs. Pioneer Municipal High | New America vs. DWS Municipal Income | New America vs. RiverNorth Specialty Finance | New America vs. Putnam Managed Municipal |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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