Correlation Between Aam Select and First Investors

Can any of the company-specific risk be diversified away by investing in both Aam Select and First Investors 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 Aam Select and First Investors into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aam Select Income and First Investors Tax, you can compare the effects of market volatilities on Aam Select and First Investors 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 Aam Select with a short position of First Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aam Select and First Investors.

Diversification Opportunities for Aam Select and First Investors

0.79

Correlation Coefficient

Aam Select  First Investors

Poor diversification

The 3 months correlation between Aam and First is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Aam Select Income and First Investors Tax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Investors Tax and Aam Select 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 Aam Select Income are associated (or correlated) with First Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Investors Tax has no effect on the direction of Aam Select i.e., Aam Select and First Investors go up and down completely randomly.

Pair Corralation between Aam Select and First Investors

Assuming the 90 days horizon Aam Select Income is expected to generate 0.93 times more return on investment than First Investors. However, Aam Select Income is 1.07 times less risky than First Investors. It trades about 0.1 of its potential returns per unit of risk. First Investors Tax is currently generating about 0.08 per unit of risk. If you would invest  782.00  in Aam Select Income on July 12, 2025 and sell it today you would earn a total of  155.00  from holding Aam Select Income or generate 19.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Aam Select Income  vs.  First Investors Tax

Aam Select Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aam Select Income are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Aam Select is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Investors Tax

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Investors Tax are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, First Investors is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aam Select and First Investors

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

The idea behind Aam Select Income and First Investors Tax 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.