Correlation Between Financial Industries and Optimum Fixed
Can any of the company-specific risk be diversified away by investing in both Financial Industries and Optimum Fixed 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 Financial Industries and Optimum Fixed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial Industries Fund and Optimum Fixed Income, you can compare the effects of market volatilities on Financial Industries and Optimum Fixed 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 Financial Industries with a short position of Optimum Fixed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Industries and Optimum Fixed.
Diversification Opportunities for Financial Industries and Optimum Fixed
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Financial and Optimum is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Financial Industries Fund and Optimum Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimum Fixed Income and Financial Industries 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 Financial Industries Fund are associated (or correlated) with Optimum Fixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimum Fixed Income has no effect on the direction of Financial Industries i.e., Financial Industries and Optimum Fixed go up and down completely randomly.
Pair Corralation between Financial Industries and Optimum Fixed
Assuming the 90 days horizon Financial Industries Fund is expected to under-perform the Optimum Fixed. In addition to that, Financial Industries is 7.16 times more volatile than Optimum Fixed Income. It trades about -0.31 of its total potential returns per unit of risk. Optimum Fixed Income is currently generating about -0.36 per unit of volatility. If you would invest 814.00 in Optimum Fixed Income on October 12, 2024 and sell it today you would lose (16.00) from holding Optimum Fixed Income or give up 1.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial Industries Fund vs. Optimum Fixed Income
Performance |
| Timeline |
| Financial Industries |
| Optimum Fixed Income |
Financial Industries and Optimum Fixed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial Industries and Optimum Fixed
The main advantage of trading using opposite Financial Industries and Optimum Fixed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Industries position performs unexpectedly, Optimum Fixed 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 Optimum Fixed will offset losses from the drop in Optimum Fixed's long position.| Financial Industries vs. Gabelli Global Financial | Financial Industries vs. Mesirow Financial Small | Financial Industries vs. Icon Financial Fund | Financial Industries vs. Blackrock Financial Institutions |
| Optimum Fixed vs. Financial Industries Fund | Optimum Fixed vs. Goldman Sachs Financial | Optimum Fixed vs. Putnam Global Financials | Optimum Fixed vs. Mesirow Financial Small |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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