Correlation Between Salient Select and Salient Tactical
Can any of the company-specific risk be diversified away by investing in both Salient Select and Salient Tactical 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 Salient Select and Salient Tactical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salient Select Income and Salient Tactical Plus, you can compare the effects of market volatilities on Salient Select and Salient Tactical 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 Salient Select with a short position of Salient Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salient Select and Salient Tactical.
Diversification Opportunities for Salient Select and Salient Tactical
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Salient and Salient is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Salient Select Income and Salient Tactical Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient Tactical Plus and Salient Select 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 Salient Select Income are associated (or correlated) with Salient Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient Tactical Plus has no effect on the direction of Salient Select i.e., Salient Select and Salient Tactical go up and down completely randomly.
Pair Corralation between Salient Select and Salient Tactical
Assuming the 90 days horizon Salient Select Income is expected to under-perform the Salient Tactical. But the mutual fund apears to be less risky and, when comparing its historical volatility, Salient Select Income is 1.39 times less risky than Salient Tactical. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Salient Tactical Plus is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,185 in Salient Tactical Plus on August 26, 2024 and sell it today you would earn a total of 7.00 from holding Salient Tactical Plus or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salient Select Income vs. Salient Tactical Plus
Performance |
| Timeline |
| Salient Select Income |
| Salient Tactical Plus |
Salient Select and Salient Tactical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salient Select and Salient Tactical
The main advantage of trading using opposite Salient Select and Salient Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salient Select position performs unexpectedly, Salient Tactical 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 Tactical will offset losses from the drop in Salient Tactical's long position.| Salient Select vs. Salient Tactical Plus | Salient Select vs. Salient Tactical Plus | Salient Select vs. Salient Tactical Plus | Salient Select vs. Salient Tactical Plus |
| Salient Tactical vs. Salient Tactical Plus | Salient Tactical vs. Salient Tactical Plus | Salient Tactical vs. Salient Tactical Growth | Salient Tactical vs. Salient Tactical Growth |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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