Correlation Between Americafirst Large and Horizon Defined

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

Diversification Opportunities for Americafirst Large and Horizon Defined

0.66

Correlation Coefficient

Americafirst Large  Horizon Defined

Poor diversification

The 3 months correlation between Americafirst and Horizon is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Americafirst Large Cap and Horizon Defined Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Defined Risk 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 Horizon Defined. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Defined Risk has no effect on the direction of Americafirst Large i.e., Americafirst Large and Horizon Defined go up and down completely randomly.

Pair Corralation between Americafirst Large and Horizon Defined

Assuming the 90 days horizon Americafirst Large Cap is expected to under-perform the Horizon Defined. In addition to that, Americafirst Large is 3.06 times more volatile than Horizon Defined Risk. It trades about -0.07 of its total potential returns per unit of risk. Horizon Defined Risk is currently generating about -0.04 per unit of volatility. If you would invest  7,810  in Horizon Defined Risk on October 11, 2024 and sell it today you would lose (38.00) from holding Horizon Defined Risk or give up 0.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Americafirst Large Cap  vs.  Horizon Defined Risk

Americafirst Large Cap

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Americafirst Large Cap are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Americafirst Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Horizon Defined Risk

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Defined Risk are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Horizon Defined 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 Horizon Defined

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

The idea behind Americafirst Large Cap and Horizon Defined Risk 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.