Correlation Between Americafirst Large and Banking Fund
Can any of the company-specific risk be diversified away by investing in both Americafirst Large and Banking Fund 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 Banking Fund 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 Banking Fund Class, you can compare the effects of market volatilities on Americafirst Large and Banking Fund 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 Banking Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Americafirst Large and Banking Fund.
Diversification Opportunities for Americafirst Large and Banking Fund
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Americafirst and Banking is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Americafirst Large Cap and Banking Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banking Fund Class 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 Banking Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banking Fund Class has no effect on the direction of Americafirst Large i.e., Americafirst Large and Banking Fund go up and down completely randomly.
Pair Corralation between Americafirst Large and Banking Fund
Assuming the 90 days horizon Americafirst Large Cap is expected to under-perform the Banking Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Americafirst Large Cap is 1.03 times less risky than Banking Fund. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Banking Fund Class is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 7,503 in Banking Fund Class on November 4, 2024 and sell it today you would earn a total of 489.00 from holding Banking Fund Class or generate 6.52% 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. Banking Fund Class
Performance |
| Timeline |
| Americafirst Large Cap |
| Banking Fund Class |
Americafirst Large and Banking Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Americafirst Large and Banking Fund
The main advantage of trading using opposite Americafirst Large and Banking Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Americafirst Large position performs unexpectedly, Banking Fund 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 Banking Fund will offset losses from the drop in Banking Fund's long position.| Americafirst Large vs. Diversified Income Fund | Americafirst Large vs. Voya Solution Conservative | Americafirst Large vs. Global Diversified Income | Americafirst Large vs. Tiaa Cref Lifestyle Conservative |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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