Correlation Between Americafirst Large and Regional Bank
Can any of the company-specific risk be diversified away by investing in both Americafirst Large and Regional Bank 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 Regional Bank 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 Regional Bank Fund, you can compare the effects of market volatilities on Americafirst Large and Regional Bank 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 Regional Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Americafirst Large and Regional Bank.
Diversification Opportunities for Americafirst Large and Regional Bank
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Americafirst and Regional is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Americafirst Large Cap and Regional Bank Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Bank 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 Regional Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Bank has no effect on the direction of Americafirst Large i.e., Americafirst Large and Regional Bank go up and down completely randomly.
Pair Corralation between Americafirst Large and Regional Bank
Assuming the 90 days horizon Americafirst Large Cap is expected to generate 0.66 times more return on investment than Regional Bank. However, Americafirst Large Cap is 1.5 times less risky than Regional Bank. It trades about -0.22 of its potential returns per unit of risk. Regional Bank Fund is currently generating about -0.15 per unit of risk. If you would invest 1,385 in Americafirst Large Cap on November 27, 2024 and sell it today you would lose (47.00) from holding Americafirst Large Cap or give up 3.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Americafirst Large Cap vs. Regional Bank Fund
Performance |
| Timeline |
| Americafirst Large Cap |
| Regional Bank |
Americafirst Large and Regional Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Americafirst Large and Regional Bank
The main advantage of trading using opposite Americafirst Large and Regional Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Americafirst Large position performs unexpectedly, Regional Bank 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 Regional Bank will offset losses from the drop in Regional Bank's long position.| Americafirst Large vs. Versatile Bond Portfolio | Americafirst Large vs. Buffalo High Yield | Americafirst Large vs. T Rowe Price | Americafirst Large vs. Ms Global Fixed |
| Regional Bank vs. The Hartford Inflation | Regional Bank vs. Inflation Linked Fixed Income | Regional Bank vs. Aqr Managed Futures | Regional Bank vs. Ab Bond Inflation |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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