Correlation Between Aama Equity and Investment

Specify exactly 2 symbols:
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

1.0
  Correlation Coefficient

No risk reduction

The 3 months correlation between Aama and Investment is 1.0. 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 is expected to generate 1.14 times less return on investment than Investment. But when comparing it to its historical volatility, Aama Equity Fund is 1.3 times less risky than Investment. It trades about 0.29 of its potential returns per unit of risk. Investment Of America is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  5,321  in Investment Of America on December 29, 2023 and sell it today you would earn a total of  203.00  from holding Investment Of America or generate 3.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

AAMA EQUITY FUND  vs.  INVESTMENT OF AMERICA

 Performance 
       Timeline  
Aama Equity Fund 

Risk-Adjusted Performance

17 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Aama Equity Fund are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Aama Equity may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Investment Of America 

Risk-Adjusted Performance

17 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Investment Of America are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Investment may actually be approaching a critical reversion point that can send shares even higher in April 2024.

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.
The idea behind Aama Equity Fund and Investment Of America pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

Other Complementary Tools

Bonds Directory
Find actively traded corporate debentures issued by US companies
Global Correlations
Find global opportunities by holding instruments from different markets
Stocks Directory
Find actively traded stocks across global markets
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance
Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Portfolio Dashboard
Portfolio dashboard that provides centralized access to all your investments
Global Markets Map
Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes
Funds Screener
Find actively-traded funds from around the world traded on over 30 global exchanges