Correlation Between Salient Select and Materials Portfolio
Can any of the company-specific risk be diversified away by investing in both Salient Select and Materials Portfolio 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 Materials Portfolio 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 Materials Portfolio Fidelity, you can compare the effects of market volatilities on Salient Select and Materials Portfolio 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 Materials Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salient Select and Materials Portfolio.
Diversification Opportunities for Salient Select and Materials Portfolio
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Salient and Materials is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Salient Select Income and Materials Portfolio Fidelity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materials Portfolio 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 Materials Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Materials Portfolio has no effect on the direction of Salient Select i.e., Salient Select and Materials Portfolio go up and down completely randomly.
Pair Corralation between Salient Select and Materials Portfolio
Assuming the 90 days horizon Salient Select Income is expected to generate 0.54 times more return on investment than Materials Portfolio. However, Salient Select Income is 1.84 times less risky than Materials Portfolio. It trades about 0.1 of its potential returns per unit of risk. Materials Portfolio Fidelity is currently generating about 0.04 per unit of risk. If you would invest 1,613 in Salient Select Income on September 2, 2024 and sell it today you would earn a total of 358.00 from holding Salient Select Income or generate 22.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salient Select Income vs. Materials Portfolio Fidelity
Performance |
| Timeline |
| Salient Select Income |
| Materials Portfolio |
Salient Select and Materials Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salient Select and Materials Portfolio
The main advantage of trading using opposite Salient Select and Materials Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salient Select position performs unexpectedly, Materials Portfolio 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 Materials Portfolio will offset losses from the drop in Materials Portfolio's long position.| Salient Select vs. Western Asset High | Salient Select vs. Ab High Income | Salient Select vs. Alliancebernstein Global High | Salient Select vs. Franklin High Income |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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