Correlation Between Undiscovered Managers and American Independence
Can any of the company-specific risk be diversified away by investing in both Undiscovered Managers and American Independence 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 Undiscovered Managers and American Independence into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Undiscovered Managers Behavioral and American Independence Kansas, you can compare the effects of market volatilities on Undiscovered Managers and American Independence 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 Undiscovered Managers with a short position of American Independence. Check out your portfolio center. Please also check ongoing floating volatility patterns of Undiscovered Managers and American Independence.
Diversification Opportunities for Undiscovered Managers and American Independence
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Undiscovered and American is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Undiscovered Managers Behavior and American Independence Kansas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Independence and Undiscovered Managers 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 Undiscovered Managers Behavioral are associated (or correlated) with American Independence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Independence has no effect on the direction of Undiscovered Managers i.e., Undiscovered Managers and American Independence go up and down completely randomly.
Pair Corralation between Undiscovered Managers and American Independence
Assuming the 90 days horizon Undiscovered Managers Behavioral is expected to generate 6.71 times more return on investment than American Independence. However, Undiscovered Managers is 6.71 times more volatile than American Independence Kansas. It trades about 0.28 of its potential returns per unit of risk. American Independence Kansas is currently generating about 0.22 per unit of risk. If you would invest 8,677 in Undiscovered Managers Behavioral on September 1, 2024 and sell it today you would earn a total of 774.00 from holding Undiscovered Managers Behavioral or generate 8.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Undiscovered Managers Behavior vs. American Independence Kansas
Performance |
| Timeline |
| Undiscovered Managers |
| American Independence |
Undiscovered Managers and American Independence Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Undiscovered Managers and American Independence
The main advantage of trading using opposite Undiscovered Managers and American Independence positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Undiscovered Managers position performs unexpectedly, American Independence 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 American Independence will offset losses from the drop in American Independence's long position.| Undiscovered Managers vs. Jpmorgan Small Cap | Undiscovered Managers vs. Hartford Schroders Emerging | Undiscovered Managers vs. Diamond Hill Large | Undiscovered Managers vs. Edgewood Growth Fund |
| American Independence vs. Scharf Global Opportunity | American Independence vs. Fabxx | American Independence vs. Qs Large Cap | American Independence vs. T Rowe Price |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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