Correlation Between Amana Growth and Azzad Wise

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

By analyzing existing cross correlation between Amana Growth Fund and Azzad Wise Capital, you can compare the effects of market volatilities on Amana Growth and Azzad Wise 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 Amana Growth with a short position of Azzad Wise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amana Growth and Azzad Wise.

Diversification Opportunities for Amana Growth and Azzad Wise

0.82

Correlation Coefficient

Amana Growth  Azzad Wise

Very poor diversification

The 3 months correlation between Amana and Azzad is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Amana Growth Fund and Azzad Wise Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azzad Wise Capital and Amana Growth 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 Amana Growth Fund are associated (or correlated) with Azzad Wise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azzad Wise Capital has no effect on the direction of Amana Growth i.e., Amana Growth and Azzad Wise go up and down completely randomly.

Pair Corralation between Amana Growth and Azzad Wise

Assuming the 90 days horizon Amana Growth Fund is expected to under-perform the Azzad Wise. In addition to that, Amana Growth is 12.88 times more volatile than Azzad Wise Capital. It trades about -0.08 of its total potential returns per unit of risk. Azzad Wise Capital is currently generating about -0.04 per unit of volatility. If you would invest  1,074  in Azzad Wise Capital on October 20, 2024 and sell it today you would lose (2.00) from holding Azzad Wise Capital or give up 0.19% of portfolio value over 90 days.

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

Amana Growth Fund  vs.  Azzad Wise Capital

Amana Growth

Risk-Adjusted Performance

0 of 100

Very Weak

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

Azzad Wise Capital

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Amana Growth and Azzad Wise

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

The idea behind Amana Growth Fund and Azzad Wise Capital 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .