Correlation Between Aama Income and Total Return
Can any of the company-specific risk be diversified away by investing in both Aama Income and Total Return 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 Total Return 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 Total Return Fund, you can compare the effects of market volatilities on Aama Income and Total Return 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 Total Return. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aama Income and Total Return.
Diversification Opportunities for Aama Income and Total Return
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aama and Total is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Aama Income Fund and Total Return Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Return 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 Total Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Return has no effect on the direction of Aama Income i.e., Aama Income and Total Return go up and down completely randomly.
Pair Corralation between Aama Income and Total Return
Assuming the 90 days horizon Aama Income Fund is expected to generate 0.25 times more return on investment than Total Return. However, Aama Income Fund is 3.95 times less risky than Total Return. It trades about -0.12 of its potential returns per unit of risk. Total Return Fund is currently generating about -0.21 per unit of risk. If you would invest 2,359 in Aama Income Fund on January 20, 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aama Income Fund vs. Total Return Fund
Performance |
| Timeline |
| Aama Me Fund |
| Total Return |
Aama Income and Total Return Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aama Income and Total Return
The main advantage of trading using opposite Aama Income and Total Return positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aama Income position performs unexpectedly, Total Return 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 Total Return will offset losses from the drop in Total Return's long position.| Aama Income vs. Aama Equity Fund | Aama Income vs. Asg Managed Futures | Aama Income vs. Pimco Dynamic Income | Aama Income vs. Semiconductors Portfolio Semiconductors |
| Total Return vs. Vanguard Institutional Index | Total Return vs. Dodge Stock Fund | Total Return vs. Europacific Growth Fund | Total Return vs. Real 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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