Correlation Between Aama Equity and Investment
Can any of the company-specific risk be diversified away by investing in both Aama Equity and Investment 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 Aama Equity and Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aama Equity Fund and Investment Of America, you can compare the effects of market volatilities on Aama Equity and Investment 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 Aama Equity with a short position of Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aama Equity and Investment.
Diversification Opportunities for Aama Equity and Investment
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Aama and Investment is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Aama Equity Fund and Investment Of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Of America and Aama Equity 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 Aama Equity Fund are associated (or correlated) with Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Of America has no effect on the direction of Aama Equity i.e., Aama Equity and Investment go up and down completely randomly.
Pair Corralation between Aama Equity and Investment
Assuming the 90 days horizon Aama Equity Fund is expected to generate 0.74 times more return on investment than Investment. However, Aama Equity Fund is 1.36 times less risky than Investment. It trades about -0.26 of its potential returns per unit of risk. Investment Of America is currently generating about -0.21 per unit of risk. If you would invest 1,810 in Aama Equity Fund on January 20, 2024 and sell it today you would lose (55.00) from holding Aama Equity Fund or give up 3.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aama Equity Fund vs. Investment Of America
Performance |
| Timeline |
| Aama Equity Fund |
| Investment Of America |
Aama Equity and Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aama Equity and Investment
The main advantage of trading using opposite Aama Equity and Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aama Equity position performs unexpectedly, Investment 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 Investment will offset losses from the drop in Investment's long position.| Aama Equity vs. Aama Income Fund | Aama Equity vs. Materials Portfolio Fidelity | Aama Equity vs. Vanguard Energy Fund | Aama Equity vs. Morningstar Alternatives |
| Investment vs. Growth Fund Of | Investment vs. Europacific Growth Fund | Investment vs. Smallcap World Fund | Investment vs. New World Fund |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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