Correlation Between Iman Fund and Amana Income

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

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

Diversification Opportunities for Iman Fund and Amana Income

0.53

Correlation Coefficient

Iman Fund  Amana Income

Very weak diversification

The 3 months correlation between Iman and Amana is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Iman Fund Class and Amana Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amana Income and Iman Fund 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 Iman Fund Class are associated (or correlated) with Amana Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amana Income has no effect on the direction of Iman Fund i.e., Iman Fund and Amana Income go up and down completely randomly.

Pair Corralation between Iman Fund and Amana Income

Assuming the 90 days horizon Iman Fund Class is expected to generate 1.2 times more return on investment than Amana Income. However, Iman Fund is 1.2 times more volatile than Amana Income Fund. It trades about 0.16 of its potential returns per unit of risk. Amana Income Fund is currently generating about 0.01 per unit of risk. If you would invest  1,564  in Iman Fund Class on September 12, 2024 and sell it today you would earn a total of  116.00  from holding Iman Fund Class or generate 7.42% return on investment over 90 days.

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

Iman Fund Class  vs.  Amana Income Fund

Iman Fund Class

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Iman Fund Class are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Iman Fund may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Amana Income

Risk-Adjusted Performance

0 of 100

Weak

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

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

The idea behind Iman Fund Class and Amana 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.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.