Correlation Between Sustainable Equity and Select Fund
Can any of the company-specific risk be diversified away by investing in both Sustainable Equity and Select Fund 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 Sustainable Equity and Select Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sustainable Equity Fund and Select Fund R, you can compare the effects of market volatilities on Sustainable Equity and Select Fund 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 Sustainable Equity with a short position of Select Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sustainable Equity and Select Fund.
Diversification Opportunities for Sustainable Equity and Select Fund
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sustainable and Select is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sustainable Equity Fund and Select Fund R in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Fund R and Sustainable Equity 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 Sustainable Equity Fund are associated (or correlated) with Select Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Fund R has no effect on the direction of Sustainable Equity i.e., Sustainable Equity and Select Fund go up and down completely randomly.
Pair Corralation between Sustainable Equity and Select Fund
Assuming the 90 days horizon Sustainable Equity Fund is expected to under-perform the Select Fund. In addition to that, Sustainable Equity is 1.19 times more volatile than Select Fund R. It trades about -0.16 of its total potential returns per unit of risk. Select Fund R is currently generating about 0.03 per unit of volatility. If you would invest 11,517 in Select Fund R on September 28, 2024 and sell it today you would earn a total of 61.00 from holding Select Fund R or generate 0.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sustainable Equity Fund vs. Select Fund R
Performance |
| Timeline |
| Sustainable Equity |
| Select Fund R |
Sustainable Equity and Select Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sustainable Equity and Select Fund
The main advantage of trading using opposite Sustainable Equity and Select Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sustainable Equity position performs unexpectedly, Select Fund 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 Select Fund will offset losses from the drop in Select Fund's long position.| Sustainable Equity vs. Disciplined Growth Fund | Sustainable Equity vs. Focused Dynamic Growth | Sustainable Equity vs. Small Cap Growth | Sustainable Equity vs. Mid Cap Value |
| Select Fund vs. Select Fund C | Select Fund vs. Ultra Fund C | Select Fund vs. Ultra Fund R6 | Select Fund vs. Nasdaq 100 Fund Class |
Check out your portfolio center.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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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