Correlation Between Americafirst Large and Guidemark(r) Large
Can any of the company-specific risk be diversified away by investing in both Americafirst Large and Guidemark(r) 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 Americafirst Large and Guidemark(r) Large 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 Guidemark Large Cap, you can compare the effects of market volatilities on Americafirst Large and Guidemark(r) 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 Americafirst Large with a short position of Guidemark(r) Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Americafirst Large and Guidemark(r) Large.
Diversification Opportunities for Americafirst Large and Guidemark(r) Large
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Americafirst and Guidemark(r) is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Americafirst Large Cap and Guidemark Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidemark Large Cap 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 Guidemark(r) Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidemark Large Cap has no effect on the direction of Americafirst Large i.e., Americafirst Large and Guidemark(r) Large go up and down completely randomly.
Pair Corralation between Americafirst Large and Guidemark(r) Large
Assuming the 90 days horizon Americafirst Large Cap is expected to generate 1.2 times more return on investment than Guidemark(r) Large. However, Americafirst Large is 1.2 times more volatile than Guidemark Large Cap. It trades about 0.06 of its potential returns per unit of risk. Guidemark Large Cap is currently generating about -0.11 per unit of risk. If you would invest 1,382 in Americafirst Large Cap on October 23, 2024 and sell it today you would earn a total of 21.00 from holding Americafirst Large Cap or generate 1.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Americafirst Large Cap vs. Guidemark Large Cap
Performance |
| Timeline |
| Americafirst Large Cap |
| Guidemark Large Cap |
Americafirst Large and Guidemark(r) Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Americafirst Large and Guidemark(r) Large
The main advantage of trading using opposite Americafirst Large and Guidemark(r) Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Americafirst Large position performs unexpectedly, Guidemark(r) 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 Guidemark(r) Large will offset losses from the drop in Guidemark(r) Large's long position.| Americafirst Large vs. Global Technology Portfolio | Americafirst Large vs. Red Oak Technology | Americafirst Large vs. Towpath Technology | Americafirst Large vs. Pgim Jennison Technology |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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