Correlation Between Select Fund and Sp 500
Can any of the company-specific risk be diversified away by investing in both Select Fund and Sp 500 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 Select Fund and Sp 500 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Select Fund R and Sp 500 Pure, you can compare the effects of market volatilities on Select Fund and Sp 500 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 Select Fund with a short position of Sp 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Fund and Sp 500.
Diversification Opportunities for Select Fund and Sp 500
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Select and RYAWX is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Select Fund R and Sp 500 Pure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp 500 Pure and Select Fund 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 Select Fund R are associated (or correlated) with Sp 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp 500 Pure has no effect on the direction of Select Fund i.e., Select Fund and Sp 500 go up and down completely randomly.
Pair Corralation between Select Fund and Sp 500
Assuming the 90 days horizon Select Fund is expected to generate 3.95 times less return on investment than Sp 500. But when comparing it to its historical volatility, Select Fund R is 1.08 times less risky than Sp 500. It trades about 0.05 of its potential returns per unit of risk. Sp 500 Pure is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 9,971 in Sp 500 Pure on August 30, 2024 and sell it today you would earn a total of 492.00 from holding Sp 500 Pure or generate 4.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Select Fund R vs. Sp 500 Pure
Performance |
| Timeline |
| Select Fund R |
| Sp 500 Pure |
Select Fund and Sp 500 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Fund and Sp 500
The main advantage of trading using opposite Select Fund and Sp 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Fund position performs unexpectedly, Sp 500 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 Sp 500 will offset losses from the drop in Sp 500's long position.| Select Fund vs. Select Fund C | Select Fund vs. Nasdaq 100 Fund Class | Select Fund vs. Nasdaq 100 Fund Class | Select Fund vs. Aquagold International |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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