Correlation Between Americafirst Monthly and Tax Managed

Can any of the company-specific risk be diversified away by investing in both Americafirst Monthly and Tax Managed 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 Americafirst Monthly and Tax Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Americafirst Monthly Risk On and Tax Managed Large Cap, you can compare the effects of market volatilities on Americafirst Monthly and Tax Managed 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 Americafirst Monthly with a short position of Tax Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Americafirst Monthly and Tax Managed.

Diversification Opportunities for Americafirst Monthly and Tax Managed

0.88

Correlation Coefficient

Americafirst Monthly  Tax Managed

Very poor diversification

The 3 months correlation between Americafirst and Tax is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Americafirst Monthly Risk On and Tax Managed Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tax Managed Large and Americafirst Monthly 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 Americafirst Monthly Risk On are associated (or correlated) with Tax Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tax Managed Large has no effect on the direction of Americafirst Monthly i.e., Americafirst Monthly and Tax Managed go up and down completely randomly.

Pair Corralation between Americafirst Monthly and Tax Managed

Assuming the 90 days horizon Americafirst Monthly Risk On is expected to generate 2.37 times more return on investment than Tax Managed. However, Americafirst Monthly is 2.37 times more volatile than Tax Managed Large Cap. It trades about 0.11 of its potential returns per unit of risk. Tax Managed Large Cap is currently generating about -0.07 per unit of risk. If you would invest  1,451  in Americafirst Monthly Risk On on October 9, 2024 and sell it today you would earn a total of  98.00  from holding Americafirst Monthly Risk On or generate 6.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Americafirst Monthly Risk On  vs.  Tax Managed Large Cap

Americafirst Monthly

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Americafirst Monthly Risk On are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Americafirst Monthly showed solid returns over the last few months and may actually be approaching a breakup point.

Tax Managed Large

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tax Managed Large Cap are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Tax Managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Americafirst Monthly and Tax Managed

The main advantage of trading using opposite Americafirst Monthly and Tax Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Americafirst Monthly position performs unexpectedly, Tax Managed 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 Tax Managed will offset losses from the drop in Tax Managed's long position.

The idea behind Americafirst Monthly Risk On and Tax Managed Large Cap 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.