Correlation Between Financial Industries and Pender Real
Can any of the company-specific risk be diversified away by investing in both Financial Industries and Pender Real 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 Pender Real 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 Pender Real Estate, you can compare the effects of market volatilities on Financial Industries and Pender Real 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 Pender Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Industries and Pender Real.
Diversification Opportunities for Financial Industries and Pender Real
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Financial and Pender is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Financial Industries Fund and Pender Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pender Real Estate 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 Pender Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pender Real Estate has no effect on the direction of Financial Industries i.e., Financial Industries and Pender Real go up and down completely randomly.
Pair Corralation between Financial Industries and Pender Real
Assuming the 90 days horizon Financial Industries Fund is expected to generate 10.55 times more return on investment than Pender Real. However, Financial Industries is 10.55 times more volatile than Pender Real Estate. It trades about 0.03 of its potential returns per unit of risk. Pender Real Estate is currently generating about 0.28 per unit of risk. If you would invest 1,505 in Financial Industries Fund on October 14, 2024 and sell it today you would earn a total of 260.00 from holding Financial Industries Fund or generate 17.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 86.69% |
| Values | Daily Returns |
Financial Industries Fund vs. Pender Real Estate
Performance |
| Timeline |
| Financial Industries |
| Pender Real Estate |
Financial Industries and Pender Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial Industries and Pender Real
The main advantage of trading using opposite Financial Industries and Pender Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Industries position performs unexpectedly, Pender Real 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 Pender Real will offset losses from the drop in Pender Real's long position.| Financial Industries vs. Regional Bank Fund | Financial Industries vs. Regional Bank Fund | Financial Industries vs. Multimanager Lifestyle Moderate | Financial Industries vs. Multimanager Lifestyle Balanced |
| Pender Real vs. Rmb Mendon Financial | Pender Real vs. Angel Oak Financial | Pender Real vs. Financial Industries Fund | Pender Real vs. 1919 Financial Services |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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