Correlation Between AAM SP and Advisors Asset
Can any of the company-specific risk be diversified away by investing in both AAM SP and Advisors Asset 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 AAM SP and Advisors Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAM SP 500 and Advisors Asset Management, you can compare the effects of market volatilities on AAM SP and Advisors Asset 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 AAM SP with a short position of Advisors Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAM SP and Advisors Asset.
Diversification Opportunities for AAM SP and Advisors Asset
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AAM and Advisors is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding AAM SP 500 and Advisors Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advisors Asset Management and AAM SP 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 AAM SP 500 are associated (or correlated) with Advisors Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advisors Asset Management has no effect on the direction of AAM SP i.e., AAM SP and Advisors Asset go up and down completely randomly.
Pair Corralation between AAM SP and Advisors Asset
Given the investment horizon of 90 days AAM SP 500 is expected to generate 1.0 times more return on investment than Advisors Asset. However, AAM SP 500 is 1.0 times less risky than Advisors Asset. It trades about 0.08 of its potential returns per unit of risk. Advisors Asset Management is currently generating about 0.07 per unit of risk. If you would invest 2,756 in AAM SP 500 on September 12, 2024 and sell it today you would earn a total of 639.00 from holding AAM SP 500 or generate 23.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 90.06% |
| Values | Daily Returns |
AAM SP 500 vs. Advisors Asset Management
Performance |
| Timeline |
| AAM SP 500 |
| Advisors Asset Management |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
AAM SP and Advisors Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAM SP and Advisors Asset
The main advantage of trading using opposite AAM SP and Advisors Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAM SP position performs unexpectedly, Advisors Asset 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 Advisors Asset will offset losses from the drop in Advisors Asset's long position.| AAM SP vs. SPDR Portfolio Aggregate | AAM SP vs. WBI Power Factor | AAM SP vs. Global X MSCI | AAM SP vs. HUMANA INC |
| Advisors Asset vs. Global X MSCI | Advisors Asset vs. Global X MSCI | Advisors Asset vs. AAM SP 500 | Advisors Asset vs. ALPS Emerging Sector |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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