Correlation Between Sp 500 and American Independence
Can any of the company-specific risk be diversified away by investing in both Sp 500 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 Sp 500 and American Independence into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sp 500 Index and American Independence Kansas, you can compare the effects of market volatilities on Sp 500 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 Sp 500 with a short position of American Independence. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sp 500 and American Independence.
Diversification Opportunities for Sp 500 and American Independence
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between USPRX and American is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sp 500 Index and American Independence Kansas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Independence and Sp 500 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 Sp 500 Index 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 Sp 500 i.e., Sp 500 and American Independence go up and down completely randomly.
Pair Corralation between Sp 500 and American Independence
Assuming the 90 days horizon Sp 500 Index is expected to generate 3.24 times more return on investment than American Independence. However, Sp 500 is 3.24 times more volatile than American Independence Kansas. It trades about 0.38 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 7,273 in Sp 500 Index on September 1, 2024 and sell it today you would earn a total of 450.00 from holding Sp 500 Index or generate 6.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sp 500 Index vs. American Independence Kansas
Performance |
| Timeline |
| Sp 500 Index |
| American Independence |
Sp 500 and American Independence Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sp 500 and American Independence
The main advantage of trading using opposite Sp 500 and American Independence positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sp 500 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.| Sp 500 vs. Small Cap Stock | Sp 500 vs. Extended Market Index | Sp 500 vs. Value Fund Value | Sp 500 vs. Income Stock 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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