Correlation Between Global Technology and Aama Income
Can any of the company-specific risk be diversified away by investing in both Global Technology and Aama Income 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 Global Technology and Aama Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Technology Portfolio and Aama Income Fund, you can compare the effects of market volatilities on Global Technology and Aama Income 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 Global Technology with a short position of Aama Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Technology and Aama Income.
Diversification Opportunities for Global Technology and Aama Income
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and Aama is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Global Technology Portfolio and Aama Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aama Income Fund and Global Technology 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 Global Technology Portfolio are associated (or correlated) with Aama Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aama Income Fund has no effect on the direction of Global Technology i.e., Global Technology and Aama Income go up and down completely randomly.
Pair Corralation between Global Technology and Aama Income
Assuming the 90 days horizon Global Technology Portfolio is expected to generate 15.89 times more return on investment than Aama Income. However, Global Technology is 15.89 times more volatile than Aama Income Fund. It trades about 0.02 of its potential returns per unit of risk. Aama Income Fund is currently generating about 0.17 per unit of risk. If you would invest 2,155 in Global Technology Portfolio on September 13, 2024 and sell it today you would earn a total of 6.00 from holding Global Technology Portfolio or generate 0.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Technology Portfolio vs. Aama Income Fund
Performance |
| Timeline |
| Global Technology |
| Aama Income Fund |
Global Technology and Aama Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Technology and Aama Income
The main advantage of trading using opposite Global Technology and Aama Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Technology position performs unexpectedly, Aama Income 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 Aama Income will offset losses from the drop in Aama Income's long position.| Global Technology vs. Lord Abbett Small | Global Technology vs. Pace Smallmedium Value | Global Technology vs. Fpa Queens Road | Global Technology vs. Applied Finance Explorer |
| Aama Income vs. Vanguard Small Cap Value | Aama Income vs. Queens Road Small | Aama Income vs. Omni Small Cap Value | Aama Income vs. Fpa Queens Road |
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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