Correlation Between Americafirst Large and Ishares Municipal
Can any of the company-specific risk be diversified away by investing in both Americafirst Large and Ishares Municipal 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 Ishares Municipal 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 Ishares Municipal Bond, you can compare the effects of market volatilities on Americafirst Large and Ishares Municipal 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 Ishares Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Americafirst Large and Ishares Municipal.
Diversification Opportunities for Americafirst Large and Ishares Municipal
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Americafirst and Ishares is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Americafirst Large Cap and Ishares Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ishares Municipal Bond 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 Ishares Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ishares Municipal Bond has no effect on the direction of Americafirst Large i.e., Americafirst Large and Ishares Municipal go up and down completely randomly.
Pair Corralation between Americafirst Large and Ishares Municipal
Assuming the 90 days horizon Americafirst Large Cap is expected to generate 4.79 times more return on investment than Ishares Municipal. However, Americafirst Large is 4.79 times more volatile than Ishares Municipal Bond. It trades about 0.03 of its potential returns per unit of risk. Ishares Municipal Bond is currently generating about 0.05 per unit of risk. If you would invest 1,390 in Americafirst Large Cap on October 30, 2024 and sell it today you would earn a total of 52.00 from holding Americafirst Large Cap or generate 3.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Americafirst Large Cap vs. Ishares Municipal Bond
Performance |
| Timeline |
| Americafirst Large Cap |
| Ishares Municipal Bond |
Americafirst Large and Ishares Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Americafirst Large and Ishares Municipal
The main advantage of trading using opposite Americafirst Large and Ishares Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Americafirst Large position performs unexpectedly, Ishares Municipal 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 Ishares Municipal will offset losses from the drop in Ishares Municipal's long position.| Americafirst Large vs. Invesco Technology Fund | Americafirst Large vs. Columbia Global Technology | Americafirst Large vs. Allianzgi Technology Fund | Americafirst Large vs. Vanguard Information Technology |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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