Correlation Between Balanced Fund and Optimum Large
Can any of the company-specific risk be diversified away by investing in both Balanced Fund and Optimum Large 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 Optimum Large 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 Optimum Large Cap, you can compare the effects of market volatilities on Balanced Fund and Optimum Large 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 Optimum Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Optimum Large.
Diversification Opportunities for Balanced Fund and Optimum Large
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Balanced and Optimum is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Retail and Optimum Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimum Large Cap 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 Optimum Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimum Large Cap has no effect on the direction of Balanced Fund i.e., Balanced Fund and Optimum Large go up and down completely randomly.
Pair Corralation between Balanced Fund and Optimum Large
Assuming the 90 days horizon Balanced Fund Retail is expected to generate 0.79 times more return on investment than Optimum Large. However, Balanced Fund Retail is 1.27 times less risky than Optimum Large. It trades about 0.04 of its potential returns per unit of risk. Optimum Large Cap is currently generating about 0.03 per unit of risk. If you would invest 1,113 in Balanced Fund Retail on November 30, 2024 and sell it today you would earn a total of 164.00 from holding Balanced Fund Retail or generate 14.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balanced Fund Retail vs. Optimum Large Cap
Performance |
| Timeline |
| Balanced Fund Retail |
| Optimum Large Cap |
Balanced Fund and Optimum Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and Optimum Large
The main advantage of trading using opposite Balanced Fund and Optimum Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund position performs unexpectedly, Optimum Large 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 Large will offset losses from the drop in Optimum Large's 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 |
| Optimum Large vs. Prudential Government Money | Optimum Large vs. Us Government Securities | Optimum Large vs. Blackrock Government Bond | Optimum Large vs. Us Government Securities |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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