Correlation Between Americafirst Large and Siit Large
Can any of the company-specific risk be diversified away by investing in both Americafirst Large and Siit 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 Siit 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 Siit Large Cap, you can compare the effects of market volatilities on Americafirst Large and Siit 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 Siit Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Americafirst Large and Siit Large.
Diversification Opportunities for Americafirst Large and Siit Large
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Americafirst and SIIT is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Americafirst Large Cap and Siit Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siit 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 Siit Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siit Large Cap has no effect on the direction of Americafirst Large i.e., Americafirst Large and Siit Large go up and down completely randomly.
Pair Corralation between Americafirst Large and Siit Large
Assuming the 90 days horizon Americafirst Large is expected to generate 1.17 times less return on investment than Siit Large. In addition to that, Americafirst Large is 1.17 times more volatile than Siit Large Cap. It trades about 0.1 of its total potential returns per unit of risk. Siit Large Cap is currently generating about 0.14 per unit of volatility. If you would invest 1,144 in Siit Large Cap on September 3, 2024 and sell it today you would earn a total of 162.00 from holding Siit Large Cap or generate 14.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Americafirst Large Cap vs. Siit Large Cap
Performance |
| Timeline |
| Americafirst Large Cap |
| Siit Large Cap |
Americafirst Large and Siit Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Americafirst Large and Siit Large
The main advantage of trading using opposite Americafirst Large and Siit Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Americafirst Large position performs unexpectedly, Siit 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 Siit Large will offset losses from the drop in Siit Large's long position.The idea behind Americafirst Large Cap and Siit Large Cap 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.
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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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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