Correlation Between Americafirst Large and Fmasx
Can any of the company-specific risk be diversified away by investing in both Americafirst Large and Fmasx 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 Fmasx 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 Fmasx, you can compare the effects of market volatilities on Americafirst Large and Fmasx 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 Fmasx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Americafirst Large and Fmasx.
Diversification Opportunities for Americafirst Large and Fmasx
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Americafirst and Fmasx is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Americafirst Large Cap and Fmasx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fmasx 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 Fmasx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fmasx has no effect on the direction of Americafirst Large i.e., Americafirst Large and Fmasx go up and down completely randomly.
Pair Corralation between Americafirst Large and Fmasx
Assuming the 90 days horizon Americafirst Large Cap is expected to under-perform the Fmasx. But the mutual fund apears to be less risky and, when comparing its historical volatility, Americafirst Large Cap is 1.1 times less risky than Fmasx. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Fmasx is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,515 in Fmasx on November 7, 2024 and sell it today you would earn a total of 19.00 from holding Fmasx or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Americafirst Large Cap vs. Fmasx
Performance |
| Timeline |
| Americafirst Large Cap |
| Fmasx |
Americafirst Large and Fmasx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Americafirst Large and Fmasx
The main advantage of trading using opposite Americafirst Large and Fmasx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Americafirst Large position performs unexpectedly, Fmasx 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 Fmasx will offset losses from the drop in Fmasx's long position.| Americafirst Large vs. T Rowe Price | Americafirst Large vs. Ms Global Fixed | Americafirst Large vs. T Rowe Price | Americafirst Large vs. Massmutual Premier High |
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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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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