Correlation Between Americafirst Large and Fabxx
Can any of the company-specific risk be diversified away by investing in both Americafirst Large and Fabxx 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 Large and Fabxx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Americafirst Large Cap and Fabxx, you can compare the effects of market volatilities on Americafirst Large and Fabxx 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 Large with a short position of Fabxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Americafirst Large and Fabxx.
Diversification Opportunities for Americafirst Large and Fabxx
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Americafirst and Fabxx is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Americafirst Large Cap and Fabxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fabxx and Americafirst Large 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 Large Cap are associated (or correlated) with Fabxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fabxx has no effect on the direction of Americafirst Large i.e., Americafirst Large and Fabxx go up and down completely randomly.
Pair Corralation between Americafirst Large and Fabxx
Assuming the 90 days horizon Americafirst Large Cap is expected to generate 0.24 times more return on investment than Fabxx. However, Americafirst Large Cap is 4.23 times less risky than Fabxx. It trades about 0.1 of its potential returns per unit of risk. Fabxx is currently generating about -0.02 per unit of risk. If you would invest 1,313 in Americafirst Large Cap on September 3, 2024 and sell it today you would earn a total of 154.00 from holding Americafirst Large Cap or generate 11.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Americafirst Large Cap vs. Fabxx
Performance |
| Timeline |
| Americafirst Large Cap |
| Fabxx |
Americafirst Large and Fabxx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Americafirst Large and Fabxx
The main advantage of trading using opposite Americafirst Large and Fabxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Americafirst Large position performs unexpectedly, Fabxx 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 Fabxx will offset losses from the drop in Fabxx's long position.The idea behind Americafirst Large Cap and Fabxx pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Fabxx vs. Vanguard Total Stock | Fabxx vs. Vanguard 500 Index | Fabxx vs. Vanguard Total Stock | Fabxx vs. Vanguard Total Stock |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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