Correlation Between Applied Finance and Massachusetts Investors
Can any of the company-specific risk be diversified away by investing in both Applied Finance and Massachusetts 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 Applied Finance and Massachusetts Investors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Explorer and Massachusetts Investors Trust, you can compare the effects of market volatilities on Applied Finance and Massachusetts 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 Applied Finance with a short position of Massachusetts Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Massachusetts Investors.
Diversification Opportunities for Applied Finance and Massachusetts Investors
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Applied and Massachusetts is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Massachusetts Investors Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massachusetts Investors and Applied Finance 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 Applied Finance Explorer are associated (or correlated) with Massachusetts Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massachusetts Investors has no effect on the direction of Applied Finance i.e., Applied Finance and Massachusetts Investors go up and down completely randomly.
Pair Corralation between Applied Finance and Massachusetts Investors
Assuming the 90 days horizon Applied Finance Explorer is expected to generate 2.44 times more return on investment than Massachusetts Investors. However, Applied Finance is 2.44 times more volatile than Massachusetts Investors Trust. It trades about 0.07 of its potential returns per unit of risk. Massachusetts Investors Trust is currently generating about 0.14 per unit of risk. If you would invest 1,897 in Applied Finance Explorer on September 4, 2024 and sell it today you would earn a total of 531.00 from holding Applied Finance Explorer or generate 27.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Explorer vs. Massachusetts Investors Trust
Performance |
| Timeline |
| Applied Finance Explorer |
| Massachusetts Investors |
Applied Finance and Massachusetts Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and Massachusetts Investors
The main advantage of trading using opposite Applied Finance and Massachusetts Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, Massachusetts 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 Massachusetts Investors will offset losses from the drop in Massachusetts Investors' long position.| Applied Finance vs. Thrivent Small Cap | Applied Finance vs. Applied Finance Select | Applied Finance vs. Queens Road Small | Applied Finance vs. Oberweis Small Cap Opportunities |
| Massachusetts Investors vs. Vanguard Total Stock | Massachusetts Investors vs. Vanguard 500 Index | Massachusetts Investors vs. Vanguard Total Stock | Massachusetts Investors vs. Vanguard Total Stock |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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