Correlation Between Small Cap and Americafirst Monthly

Can any of the company-specific risk be diversified away by investing in both Small Cap and Americafirst Monthly 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 Small Cap and Americafirst Monthly into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Small Cap Index and Americafirst Monthly Risk On, you can compare the effects of market volatilities on Small Cap and Americafirst Monthly 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 Small Cap with a short position of Americafirst Monthly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Americafirst Monthly.

Diversification Opportunities for Small Cap and Americafirst Monthly

0.76

Correlation Coefficient

Small Cap  Americafirst Monthly

Poor diversification

The 3 months correlation between Small and Americafirst is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Index and Americafirst Monthly Risk On in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americafirst Monthly and Small Cap 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 Small Cap Index are associated (or correlated) with Americafirst Monthly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americafirst Monthly has no effect on the direction of Small Cap i.e., Small Cap and Americafirst Monthly go up and down completely randomly.

Pair Corralation between Small Cap and Americafirst Monthly

Assuming the 90 days horizon Small Cap is expected to generate 1.29 times less return on investment than Americafirst Monthly. In addition to that, Small Cap is 1.08 times more volatile than Americafirst Monthly Risk On. It trades about 0.04 of its total potential returns per unit of risk. Americafirst Monthly Risk On is currently generating about 0.06 per unit of volatility. If you would invest  1,121  in Americafirst Monthly Risk On on October 10, 2024 and sell it today you would earn a total of  395.00  from holding Americafirst Monthly Risk On or generate 35.24% return on investment over 90 days.

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

Small Cap Index  vs.  Americafirst Monthly Risk On

Small Cap Index

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Small Cap Index are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Small Cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Americafirst Monthly

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Americafirst Monthly Risk On are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Americafirst Monthly showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Small Cap and Americafirst Monthly

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

The idea behind Small Cap Index and Americafirst Monthly Risk On 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.