Correlation Between Balanced Fund and Global Opportunities
Can any of the company-specific risk be diversified away by investing in both Balanced Fund and Global Opportunities 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 Balanced Fund and Global Opportunities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Fund Retail and Global Opportunities Fund, you can compare the effects of market volatilities on Balanced Fund and Global Opportunities 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 Balanced Fund with a short position of Global Opportunities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Global Opportunities.
Diversification Opportunities for Balanced Fund and Global Opportunities
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Balanced and Global is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Retail and Global Opportunities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Opportunities and Balanced 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 Balanced Fund Retail are associated (or correlated) with Global Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Opportunities has no effect on the direction of Balanced Fund i.e., Balanced Fund and Global Opportunities go up and down completely randomly.
Pair Corralation between Balanced Fund and Global Opportunities
Assuming the 90 days horizon Balanced Fund Retail is expected to generate 1.02 times more return on investment than Global Opportunities. However, Balanced Fund is 1.02 times more volatile than Global Opportunities Fund. It trades about 0.05 of its potential returns per unit of risk. Global Opportunities Fund is currently generating about -0.01 per unit of risk. If you would invest 1,421 in Balanced Fund Retail on August 25, 2024 and sell it today you would earn a total of 9.00 from holding Balanced Fund Retail or generate 0.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Balanced Fund Retail vs. Global Opportunities Fund
Performance |
| Timeline |
| Balanced Fund Retail |
| Global Opportunities |
Balanced Fund and Global Opportunities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and Global Opportunities
The main advantage of trading using opposite Balanced Fund and Global Opportunities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund position performs unexpectedly, Global Opportunities 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 Global Opportunities will offset losses from the drop in Global Opportunities' long position.| Balanced Fund vs. Muirfield Fund Retail | Balanced Fund vs. Dynamic Growth Fund | Balanced Fund vs. Infrastructure Fund Retail | Balanced Fund vs. Quantex Fund Retail |
| Global Opportunities vs. Dynamic Growth Fund | Global Opportunities vs. Quantex Fund Retail | Global Opportunities vs. Balanced Fund Retail | Global Opportunities vs. Infrastructure Fund Retail |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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