Correlation Between Metropolitan West and Americafirst Large
Can any of the company-specific risk be diversified away by investing in both Metropolitan West 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 Metropolitan West and Americafirst Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan West High and Americafirst Large Cap, you can compare the effects of market volatilities on Metropolitan West 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 Metropolitan West with a short position of Americafirst Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan West and Americafirst Large.
Diversification Opportunities for Metropolitan West and Americafirst Large
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Metropolitan and Americafirst is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West High 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 Metropolitan West 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 Metropolitan West High 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 Metropolitan West i.e., Metropolitan West and Americafirst Large go up and down completely randomly.
Pair Corralation between Metropolitan West and Americafirst Large
Assuming the 90 days horizon Metropolitan West is expected to generate 28.37 times less return on investment than Americafirst Large. But when comparing it to its historical volatility, Metropolitan West High is 9.93 times less risky than Americafirst Large. It trades about 0.14 of its potential returns per unit of risk. Americafirst Large Cap is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 1,341 in Americafirst Large Cap on September 2, 2024 and sell it today you would earn a total of 126.00 from holding Americafirst Large Cap or generate 9.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metropolitan West High vs. Americafirst Large Cap
Performance |
| Timeline |
| Metropolitan West High |
| Americafirst Large Cap |
Metropolitan West and Americafirst Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan West and Americafirst Large
The main advantage of trading using opposite Metropolitan West and Americafirst Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan West 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.| Metropolitan West vs. Federated Total Return | Metropolitan West vs. Global Bond Fund | Metropolitan West vs. Government Bond Fund | Metropolitan West vs. Aberdeen Global High |
| Americafirst Large vs. Metropolitan West High | Americafirst Large vs. Prudential Short Duration | Americafirst Large vs. Legg Mason Partners | Americafirst Large vs. Alpine High Yield |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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