Correlation Between Classic Value and Us Global
Can any of the company-specific risk be diversified away by investing in both Classic Value and Us Global 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 Classic Value and Us Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Classic Value Fund and Us Global Leaders, you can compare the effects of market volatilities on Classic Value and Us Global 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 Classic Value with a short position of Us Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Classic Value and Us Global.
Diversification Opportunities for Classic Value and Us Global
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Classic and USLIX is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Classic Value Fund and Us Global Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Global Leaders and Classic Value 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 Classic Value Fund are associated (or correlated) with Us Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Global Leaders has no effect on the direction of Classic Value i.e., Classic Value and Us Global go up and down completely randomly.
Pair Corralation between Classic Value and Us Global
Assuming the 90 days horizon Classic Value Fund is expected to generate 1.37 times more return on investment than Us Global. However, Classic Value is 1.37 times more volatile than Us Global Leaders. It trades about 0.21 of its potential returns per unit of risk. Us Global Leaders is currently generating about 0.18 per unit of risk. If you would invest 3,592 in Classic Value Fund on August 26, 2024 and sell it today you would earn a total of 213.00 from holding Classic Value Fund or generate 5.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Classic Value Fund vs. Us Global Leaders
Performance |
| Timeline |
| Classic Value |
| Us Global Leaders |
Classic Value and Us Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Classic Value and Us Global
The main advantage of trading using opposite Classic Value and Us Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Classic Value position performs unexpectedly, Us Global 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 Us Global will offset losses from the drop in Us Global's long position.| Classic Value vs. Regional Bank Fund | Classic Value vs. Regional Bank Fund | Classic Value vs. Multimanager Lifestyle Moderate | Classic Value vs. Multimanager Lifestyle Balanced |
| Us Global vs. Regional Bank Fund | Us Global vs. Regional Bank Fund | Us Global vs. Multimanager Lifestyle Moderate | Us Global vs. Multimanager Lifestyle Balanced |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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