Correlation Between Absolute Convertible and Nova Fund
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible and Nova 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 Absolute Convertible and Nova Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and Nova Fund Investor, you can compare the effects of market volatilities on Absolute Convertible and Nova 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 Absolute Convertible with a short position of Nova Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Nova Fund.
Diversification Opportunities for Absolute Convertible and Nova Fund
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Absolute and Nova is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Nova Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Fund Investor and Absolute Convertible 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 Absolute Convertible Arbitrage are associated (or correlated) with Nova Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Fund Investor has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Nova Fund go up and down completely randomly.
Pair Corralation between Absolute Convertible and Nova Fund
Assuming the 90 days horizon Absolute Convertible is expected to generate 5.0 times less return on investment than Nova Fund. But when comparing it to its historical volatility, Absolute Convertible Arbitrage is 20.4 times less risky than Nova Fund. It trades about 0.56 of its potential returns per unit of risk. Nova Fund Investor is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 10,516 in Nova Fund Investor on September 2, 2024 and sell it today you would earn a total of 4,803 from holding Nova Fund Investor or generate 45.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Nova Fund Investor
Performance |
| Timeline |
| Absolute Convertible |
| Nova Fund Investor |
Absolute Convertible and Nova Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Nova Fund
The main advantage of trading using opposite Absolute Convertible and Nova Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible position performs unexpectedly, Nova 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 Nova Fund will offset losses from the drop in Nova Fund's long position.| Absolute Convertible vs. Angel Oak Multi Strategy | Absolute Convertible vs. Transamerica Emerging Markets | Absolute Convertible vs. Black Oak Emerging | Absolute Convertible vs. Barings Emerging Markets |
| Nova Fund vs. Virtus Convertible | Nova Fund vs. Allianzgi Convertible Income | Nova Fund vs. Harbor Vertible Securities | Nova Fund vs. Absolute Convertible Arbitrage |
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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