Correlation Between Americafirst Defensive and Americafirst Tactical

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

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

Diversification Opportunities for Americafirst Defensive and Americafirst Tactical

-0.36

Correlation Coefficient

Americafirst Defensive  Americafirst Tactical

Very good diversification

The 3 months correlation between Americafirst and Americafirst is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Americafirst Defensive Growth and Americafirst Tactical Alpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americafirst Tactical and Americafirst Defensive 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 Defensive Growth are associated (or correlated) with Americafirst Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americafirst Tactical has no effect on the direction of Americafirst Defensive i.e., Americafirst Defensive and Americafirst Tactical go up and down completely randomly.

Pair Corralation between Americafirst Defensive and Americafirst Tactical

Assuming the 90 days horizon Americafirst Defensive is expected to generate 13.45 times less return on investment than Americafirst Tactical. But when comparing it to its historical volatility, Americafirst Defensive Growth is 2.02 times less risky than Americafirst Tactical. It trades about 0.01 of its potential returns per unit of risk. Americafirst Tactical Alpha is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,359  in Americafirst Tactical Alpha on September 2, 2024 and sell it today you would earn a total of  492.00  from holding Americafirst Tactical Alpha or generate 36.2% return on investment over 90 days.

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

Americafirst Defensive Growth  vs.  Americafirst Tactical Alpha

Americafirst Defensive

Risk-Adjusted Performance

0 of 100

Very Weak

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

Americafirst Tactical

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Americafirst Tactical Alpha are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Americafirst Tactical showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Americafirst Defensive and Americafirst Tactical

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

The idea behind Americafirst Defensive Growth and Americafirst Tactical Alpha 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.