Correlation Between Small Cap and Americafirst Income
Can any of the company-specific risk be diversified away by investing in both Small Cap and Americafirst Income 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 Small Cap and Americafirst Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Stock and Americafirst Income Fund, you can compare the effects of market volatilities on Small Cap and Americafirst Income 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 Small Cap with a short position of Americafirst Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Americafirst Income.
Diversification Opportunities for Small Cap and Americafirst Income
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Small and Americafirst is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Stock and Americafirst Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americafirst Income and Small Cap 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 Small Cap Stock are associated (or correlated) with Americafirst Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americafirst Income has no effect on the direction of Small Cap i.e., Small Cap and Americafirst Income go up and down completely randomly.
Pair Corralation between Small Cap and Americafirst Income
Assuming the 90 days horizon Small Cap Stock is expected to generate 1.74 times more return on investment than Americafirst Income. However, Small Cap is 1.74 times more volatile than Americafirst Income Fund. It trades about -0.01 of its potential returns per unit of risk. Americafirst Income Fund is currently generating about -0.18 per unit of risk. If you would invest 1,509 in Small Cap Stock on September 13, 2024 and sell it today you would lose (5.00) from holding Small Cap Stock or give up 0.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Small Cap Stock vs. Americafirst Income Fund
Performance |
| Timeline |
| Small Cap Stock |
| Americafirst Income |
Small Cap and Americafirst Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Americafirst Income
The main advantage of trading using opposite Small Cap and Americafirst Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Americafirst Income 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 Americafirst Income will offset losses from the drop in Americafirst Income's long position.| Small Cap vs. Guggenheim Managed Futures | Small Cap vs. Simt Multi Asset Inflation | Small Cap vs. Goldman Sachs Inflation | Small Cap vs. Loomis Sayles Inflation |
| Americafirst Income vs. Prudential Real Estate | Americafirst Income vs. Short Real Estate | Americafirst Income vs. Commonwealth Real Estate | Americafirst Income vs. Nexpoint Real Estate |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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