Correlation Between Spectrum Fund and Balanced Fund
Can any of the company-specific risk be diversified away by investing in both Spectrum Fund and Balanced 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 Spectrum Fund and Balanced Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spectrum Fund Retail and Balanced Fund Institutional, you can compare the effects of market volatilities on Spectrum Fund and Balanced 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 Spectrum Fund with a short position of Balanced Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spectrum Fund and Balanced Fund.
Diversification Opportunities for Spectrum Fund and Balanced Fund
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Spectrum and Balanced is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Spectrum Fund Retail and Balanced Fund Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balanced Fund Instit and Spectrum 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 Spectrum Fund Retail are associated (or correlated) with Balanced Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balanced Fund Instit has no effect on the direction of Spectrum Fund i.e., Spectrum Fund and Balanced Fund go up and down completely randomly.
Pair Corralation between Spectrum Fund and Balanced Fund
Assuming the 90 days horizon Spectrum Fund Retail is expected to generate 1.33 times more return on investment than Balanced Fund. However, Spectrum Fund is 1.33 times more volatile than Balanced Fund Institutional. It trades about 0.12 of its potential returns per unit of risk. Balanced Fund Institutional is currently generating about 0.06 per unit of risk. If you would invest 1,377 in Spectrum Fund Retail on October 24, 2024 and sell it today you would earn a total of 24.00 from holding Spectrum Fund Retail or generate 1.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spectrum Fund Retail vs. Balanced Fund Institutional
Performance |
| Timeline |
| Spectrum Fund Retail |
| Balanced Fund Instit |
Spectrum Fund and Balanced Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spectrum Fund and Balanced Fund
The main advantage of trading using opposite Spectrum Fund and Balanced Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spectrum Fund position performs unexpectedly, Balanced 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 Balanced Fund will offset losses from the drop in Balanced Fund's long position.| Spectrum Fund vs. Muirfield Fund Retail | Spectrum Fund vs. Dynamic Growth Fund | Spectrum Fund vs. Balanced Fund Retail | Spectrum Fund vs. Quantex Fund Retail |
| Balanced Fund vs. Wisdomtree Siegel Global | Balanced Fund vs. Gmo Global Equity | Balanced Fund vs. Morningstar Global Income | Balanced Fund vs. Qs Global 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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