Correlation Between Short Duration and First Investors
Can any of the company-specific risk be diversified away by investing in both Short Duration 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 Short Duration and First Investors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Short Duration Inflation and First Investors Select, you can compare the effects of market volatilities on Short Duration 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 Short Duration with a short position of First Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Duration and First Investors.
Diversification Opportunities for Short Duration and First Investors
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Short and First is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Short Duration Inflation and First Investors Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Investors Select and Short Duration 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 Short Duration Inflation 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 Select has no effect on the direction of Short Duration i.e., Short Duration and First Investors go up and down completely randomly.
Pair Corralation between Short Duration and First Investors
Assuming the 90 days horizon Short Duration is expected to generate 33.04 times less return on investment than First Investors. But when comparing it to its historical volatility, Short Duration Inflation is 10.27 times less risky than First Investors. It trades about 0.02 of its potential returns per unit of risk. First Investors Select is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,302 in First Investors Select on September 13, 2024 and sell it today you would earn a total of 38.00 from holding First Investors Select or generate 2.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Short Duration Inflation vs. First Investors Select
Performance |
| Timeline |
| Short Duration Inflation |
| First Investors Select |
Short Duration and First Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Short Duration and First Investors
The main advantage of trading using opposite Short Duration and First Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Duration 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.| Short Duration vs. Mid Cap Value | Short Duration vs. Equity Growth Fund | Short Duration vs. Income Growth Fund | Short Duration vs. Diversified Bond Fund |
| First Investors vs. Guggenheim Managed Futures | First Investors vs. Goldman Sachs Inflation | First Investors vs. Short Duration Inflation | First Investors vs. Schwab Treasury Inflation |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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