Correlation Between Aama Income and Metropolitan West
Can any of the company-specific risk be diversified away by investing in both Aama Income and Metropolitan West 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 Income and Metropolitan West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aama Income Fund and Metropolitan West Total, you can compare the effects of market volatilities on Aama Income and Metropolitan West 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 Income with a short position of Metropolitan West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aama Income and Metropolitan West.
Diversification Opportunities for Aama Income and Metropolitan West
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aama and Metropolitan is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Aama Income Fund and Metropolitan West Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan West Total and Aama Income 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 Income Fund are associated (or correlated) with Metropolitan West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan West Total has no effect on the direction of Aama Income i.e., Aama Income and Metropolitan West go up and down completely randomly.
Pair Corralation between Aama Income and Metropolitan West
Assuming the 90 days horizon Aama Income Fund is expected to generate 0.23 times more return on investment than Metropolitan West. However, Aama Income Fund is 4.35 times less risky than Metropolitan West. It trades about -0.13 of its potential returns per unit of risk. Metropolitan West Total is currently generating about -0.27 per unit of risk. If you would invest 2,362 in Aama Income Fund on January 26, 2024 and sell it today you would lose (7.00) from holding Aama Income Fund or give up 0.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aama Income Fund vs. Metropolitan West Total
Performance |
| Timeline |
| Aama Me Fund |
| Metropolitan West Total |
Aama Income and Metropolitan West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aama Income and Metropolitan West
The main advantage of trading using opposite Aama Income and Metropolitan West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aama Income position performs unexpectedly, Metropolitan West 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 Metropolitan West will offset losses from the drop in Metropolitan West's long position.| Aama Income vs. Metropolitan West Total | Aama Income vs. Total Return Fund | Aama Income vs. Strategic Advisers Fidelity | Aama Income vs. Dodge Income Fund |
| Metropolitan West vs. Metropolitan West Total | Metropolitan West vs. Pimco Total Return | Metropolitan West vs. Total Return Fund | Metropolitan West vs. Total Return 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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