Correlation Between Americafirst Large and Americafirst Tactical

Can any of the company-specific risk be diversified away by investing in both Americafirst Large 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 Large 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 Large Cap and Americafirst Tactical Alpha, you can compare the effects of market volatilities on Americafirst Large 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 Large with a short position of Americafirst Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Americafirst Large and Americafirst Tactical.

Diversification Opportunities for Americafirst Large and Americafirst Tactical

0.92

Correlation Coefficient

Americafirst Large  Americafirst Tactical

Almost no diversification

The 3 months correlation between Americafirst and Americafirst is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Americafirst Large Cap 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 Large 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 Large Cap 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 Large i.e., Americafirst Large and Americafirst Tactical go up and down completely randomly.

Pair Corralation between Americafirst Large and Americafirst Tactical

Assuming the 90 days horizon Americafirst Large Cap is expected to under-perform the Americafirst Tactical. But the mutual fund apears to be less risky and, when comparing its historical volatility, Americafirst Large Cap is 1.04 times less risky than Americafirst Tactical. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Americafirst Tactical Alpha is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,603  in Americafirst Tactical Alpha on December 26, 2024 and sell it today you would lose (73.00) from holding Americafirst Tactical Alpha or give up 4.55% of portfolio value over 90 days.

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

Americafirst Large Cap  vs.  Americafirst Tactical Alpha

Americafirst Large Cap

Risk-Adjusted Performance

Very Weak

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

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 technical and fundamental indicators, Americafirst Tactical 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 Large and Americafirst Tactical

The main advantage of trading using opposite Americafirst Large and Americafirst Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Americafirst Large 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 Large Cap 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..