Correlation Between Aegis Value and Fam Equity

Can any of the company-specific risk be diversified away by investing in both Aegis Value and Fam Equity 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 Aegis Value and Fam Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aegis Value Fund and Fam Equity Income Fund, you can compare the effects of market volatilities on Aegis Value and Fam Equity 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 Aegis Value with a short position of Fam Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegis Value and Fam Equity.

Diversification Opportunities for Aegis Value and Fam Equity

0.78

Correlation Coefficient

Aegis Value  Fam Equity

Poor diversification

The 3 months correlation between Aegis and Fam is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Aegis Value Fund and Fam Equity Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fam Equity Income and Aegis Value 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 Aegis Value Fund are associated (or correlated) with Fam Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fam Equity Income has no effect on the direction of Aegis Value i.e., Aegis Value and Fam Equity go up and down completely randomly.

Pair Corralation between Aegis Value and Fam Equity

Assuming the 90 days horizon Aegis Value Fund is expected to generate 1.25 times more return on investment than Fam Equity. However, Aegis Value is 1.25 times more volatile than Fam Equity Income Fund. It trades about 0.26 of its potential returns per unit of risk. Fam Equity Income Fund is currently generating about 0.17 per unit of risk. If you would invest  4,016  in Aegis Value Fund on May 1, 2025 and sell it today you would earn a total of  640.00  from holding Aegis Value Fund or generate 15.94% return on investment over 90 days.

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

Aegis Value Fund  vs.  Fam Equity Income Fund

Aegis Value Fund

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aegis Value Fund are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Aegis Value showed solid returns over the last few months and may actually be approaching a breakup point.

Fam Equity Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fam Equity Income Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Fam Equity may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Aegis Value and Fam Equity

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

The idea behind Aegis Value Fund and Fam Equity Income Fund 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.