Correlation Between Regional Bank and Classic Value
Can any of the company-specific risk be diversified away by investing in both Regional Bank and Classic Value 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 Regional Bank and Classic Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Bank Fund and Classic Value Fund, you can compare the effects of market volatilities on Regional Bank and Classic Value 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 Regional Bank with a short position of Classic Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Bank and Classic Value.
Diversification Opportunities for Regional Bank and Classic Value
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Regional and Classic is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Regional Bank Fund and Classic Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Classic Value and Regional Bank 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 Regional Bank Fund are associated (or correlated) with Classic Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Classic Value has no effect on the direction of Regional Bank i.e., Regional Bank and Classic Value go up and down completely randomly.
Pair Corralation between Regional Bank and Classic Value
Assuming the 90 days horizon Regional Bank Fund is expected to under-perform the Classic Value. In addition to that, Regional Bank is 1.76 times more volatile than Classic Value Fund. It trades about -0.14 of its total potential returns per unit of risk. Classic Value Fund is currently generating about -0.18 per unit of volatility. If you would invest 2,551 in Classic Value Fund on November 28, 2024 and sell it today you would lose (60.00) from holding Classic Value Fund or give up 2.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Bank Fund vs. Classic Value Fund
Performance |
| Timeline |
| Regional Bank |
| Classic Value |
Regional Bank and Classic Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Bank and Classic Value
The main advantage of trading using opposite Regional Bank and Classic Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Bank position performs unexpectedly, Classic Value 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 Classic Value will offset losses from the drop in Classic Value's long position.| Regional Bank vs. Calvert Developed Market | Regional Bank vs. Angel Oak Ultrashort | Regional Bank vs. Rbc Emerging Markets | Regional Bank vs. Siit Emerging Markets |
| Classic Value vs. Ep Emerging Markets | Classic Value vs. Goldman Sachs Small | Classic Value vs. Champlain Small | Classic Value vs. Ab Small Cap |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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