Correlation Between Americafirst Tactical and Americafirst Income

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

By analyzing existing cross correlation between Americafirst Tactical Alpha and Americafirst Income Fund, you can compare the effects of market volatilities on Americafirst Tactical and Americafirst Income 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 Tactical with a short position of Americafirst Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Americafirst Tactical and Americafirst Income.

Diversification Opportunities for Americafirst Tactical and Americafirst Income

0.65

Correlation Coefficient

Americafirst Tactical  Americafirst Income

Poor diversification

The 3 months correlation between Americafirst and Americafirst is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Americafirst Tactical Alpha and Americafirst Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americafirst Income and Americafirst Tactical 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 Tactical Alpha are associated (or correlated) with Americafirst Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americafirst Income has no effect on the direction of Americafirst Tactical i.e., Americafirst Tactical and Americafirst Income go up and down completely randomly.

Pair Corralation between Americafirst Tactical and Americafirst Income

Assuming the 90 days horizon Americafirst Tactical Alpha is expected to generate 1.89 times more return on investment than Americafirst Income. However, Americafirst Tactical is 1.89 times more volatile than Americafirst Income Fund. It trades about -0.05 of its potential returns per unit of risk. Americafirst Income Fund is currently generating about -0.11 per unit of risk. If you would invest  1,845  in Americafirst Tactical Alpha on December 1, 2024 and sell it today you would lose (88.00) from holding Americafirst Tactical Alpha or give up 4.77% of portfolio value over 90 days.

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

Americafirst Tactical Alpha  vs.  Americafirst Income Fund

Americafirst Tactical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Americafirst Tactical Alpha has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Americafirst Tactical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Americafirst Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Americafirst Income Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Americafirst Income 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 Tactical and Americafirst Income

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

The idea behind Americafirst Tactical Alpha and Americafirst Income Fund 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.

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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.