Correlation Between Income Fund and Salient Alternative
Can any of the company-specific risk be diversified away by investing in both Income Fund and Salient Alternative 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 Income Fund and Salient Alternative into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Income Fund Of and Salient Alternative Beta, you can compare the effects of market volatilities on Income Fund and Salient Alternative 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 Income Fund with a short position of Salient Alternative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Income Fund and Salient Alternative.
Diversification Opportunities for Income Fund and Salient Alternative
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Income and Salient is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Income Fund Of and Salient Alternative Beta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient Alternative Beta and Income 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 Income Fund Of are associated (or correlated) with Salient Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient Alternative Beta has no effect on the direction of Income Fund i.e., Income Fund and Salient Alternative go up and down completely randomly.
Pair Corralation between Income Fund and Salient Alternative
Assuming the 90 days horizon Income Fund is expected to generate 1.05 times less return on investment than Salient Alternative. But when comparing it to its historical volatility, Income Fund Of is 1.52 times less risky than Salient Alternative. It trades about 0.16 of its potential returns per unit of risk. Salient Alternative Beta is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,134 in Salient Alternative Beta on August 31, 2024 and sell it today you would earn a total of 113.00 from holding Salient Alternative Beta or generate 9.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Income Fund Of vs. Salient Alternative Beta
Performance |
| Timeline |
| Income Fund |
| Salient Alternative Beta |
Income Fund and Salient Alternative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Income Fund and Salient Alternative
The main advantage of trading using opposite Income Fund and Salient Alternative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Income Fund position performs unexpectedly, Salient Alternative 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 Salient Alternative will offset losses from the drop in Salient Alternative's long position.| Income Fund vs. Capital Income Builder | Income Fund vs. Capital World Growth | Income Fund vs. American Balanced Fund | Income Fund vs. Growth Fund Of |
| Salient Alternative vs. American Funds The | Salient Alternative vs. Income Fund Of | Salient Alternative vs. Income Fund Of | Salient Alternative vs. Income Fund Of |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |