Correlation Between Balanced Fund and Value Fund
Can any of the company-specific risk be diversified away by investing in both Balanced Fund and Value Fund 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 Value Fund 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 Value Fund Value, you can compare the effects of market volatilities on Balanced Fund and Value Fund 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 Value Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Value Fund.
Diversification Opportunities for Balanced Fund and Value Fund
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Balanced and Value is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Retail and Value Fund Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Fund Value 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 Value Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Fund Value has no effect on the direction of Balanced Fund i.e., Balanced Fund and Value Fund go up and down completely randomly.
Pair Corralation between Balanced Fund and Value Fund
Assuming the 90 days horizon Balanced Fund is expected to generate 1.64 times less return on investment than Value Fund. But when comparing it to its historical volatility, Balanced Fund Retail is 1.59 times less risky than Value Fund. It trades about 0.28 of its potential returns per unit of risk. Value Fund Value is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 2,120 in Value Fund Value on September 5, 2024 and sell it today you would earn a total of 117.00 from holding Value Fund Value or generate 5.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Balanced Fund Retail vs. Value Fund Value
Performance |
| Timeline |
| Balanced Fund Retail |
| Value Fund Value |
Balanced Fund and Value Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and Value Fund
The main advantage of trading using opposite Balanced Fund and Value Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund position performs unexpectedly, Value Fund 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 Value Fund will offset losses from the drop in Value Fund'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 |
| Value Fund vs. Balanced Fund Retail | Value Fund vs. Locorr Dynamic Equity | Value Fund vs. Sarofim Equity | Value Fund vs. The Hartford Equity |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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