Correlation Between Americafirst Large and Vaughan Nelson

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

Diversification Opportunities for Americafirst Large and Vaughan Nelson

0.96

Correlation Coefficient

Americafirst Large  Vaughan Nelson

Almost no diversification

The 3 months correlation between Americafirst and Vaughan is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Americafirst Large Cap and Vaughan Nelson Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vaughan Nelson Value 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 Vaughan Nelson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vaughan Nelson Value has no effect on the direction of Americafirst Large i.e., Americafirst Large and Vaughan Nelson go up and down completely randomly.

Pair Corralation between Americafirst Large and Vaughan Nelson

Assuming the 90 days horizon Americafirst Large is expected to generate 1.21 times less return on investment than Vaughan Nelson. But when comparing it to its historical volatility, Americafirst Large Cap is 1.19 times less risky than Vaughan Nelson. It trades about 0.22 of its potential returns per unit of risk. Vaughan Nelson Value is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  2,228  in Vaughan Nelson Value on September 12, 2024 and sell it today you would earn a total of  335.00  from holding Vaughan Nelson Value or generate 15.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Americafirst Large Cap  vs.  Vaughan Nelson Value

Americafirst Large Cap

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Americafirst Large Cap are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Americafirst Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Vaughan Nelson Value

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vaughan Nelson Value are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Vaughan Nelson showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Americafirst Large and Vaughan Nelson

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

The idea behind Americafirst Large Cap and Vaughan Nelson Value 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.