Correlation Between Americafirst Large and Manager Directed

Can any of the company-specific risk be diversified away by investing in both Americafirst Large and Manager Directed 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 Manager Directed 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 Manager Directed Portfolios, you can compare the effects of market volatilities on Americafirst Large and Manager Directed 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 Manager Directed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Americafirst Large and Manager Directed.

Diversification Opportunities for Americafirst Large and Manager Directed

0.55

Correlation Coefficient

Americafirst Large  Manager Directed

Very weak diversification

The 3 months correlation between Americafirst and Manager is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Americafirst Large Cap and Manager Directed Portfolios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manager Directed Por 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 Manager Directed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manager Directed Por has no effect on the direction of Americafirst Large i.e., Americafirst Large and Manager Directed go up and down completely randomly.

Pair Corralation between Americafirst Large and Manager Directed

Assuming the 90 days horizon Americafirst Large Cap is expected to under-perform the Manager Directed. But the mutual fund apears to be less risky and, when comparing its historical volatility, Americafirst Large Cap is 1.13 times less risky than Manager Directed. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Manager Directed Portfolios is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  1,207  in Manager Directed Portfolios on December 2, 2024 and sell it today you would lose (93.00) from holding Manager Directed Portfolios or give up 7.71% of portfolio value over 90 days.

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

Americafirst Large Cap  vs.  Manager Directed Portfolios

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 latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Manager Directed Por

Risk-Adjusted Performance

Very Weak

Over the last 90 days Manager Directed Portfolios has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Americafirst Large and Manager Directed

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

The idea behind Americafirst Large Cap and Manager Directed Portfolios 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..