Correlation Between Long-term and Stocksplus Total
Can any of the company-specific risk be diversified away by investing in both Long-term and Stocksplus Total 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 Long-term and Stocksplus Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Long Term Government Fund and Stocksplus Total Return, you can compare the effects of market volatilities on Long-term and Stocksplus Total 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 Long-term with a short position of Stocksplus Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Long-term and Stocksplus Total.
Diversification Opportunities for Long-term and Stocksplus Total
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Long-term and Stocksplus is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Long Term Government Fund and Stocksplus Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stocksplus Total Return and Long-term 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 Long Term Government Fund are associated (or correlated) with Stocksplus Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stocksplus Total Return has no effect on the direction of Long-term i.e., Long-term and Stocksplus Total go up and down completely randomly.
Pair Corralation between Long-term and Stocksplus Total
Assuming the 90 days horizon Long Term Government Fund is expected to under-perform the Stocksplus Total. But the mutual fund apears to be less risky and, when comparing its historical volatility, Long Term Government Fund is 1.06 times less risky than Stocksplus Total. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Stocksplus Total Return is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,314 in Stocksplus Total Return on August 28, 2024 and sell it today you would earn a total of 41.00 from holding Stocksplus Total Return or generate 3.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Long Term Government Fund vs. Stocksplus Total Return
Performance |
| Timeline |
| Long Term Government |
| Stocksplus Total Return |
Long-term and Stocksplus Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Long-term and Stocksplus Total
The main advantage of trading using opposite Long-term and Stocksplus Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Long-term position performs unexpectedly, Stocksplus Total 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 Stocksplus Total will offset losses from the drop in Stocksplus Total's long position.| Long-term vs. Atac Inflation Rotation | Long-term vs. Deutsche Global Inflation | Long-term vs. Arrow Managed Futures | Long-term vs. Guidepath Managed Futures |
| Stocksplus Total vs. Pimco Small Cap | Stocksplus Total vs. Pimco International Stocksplus | Stocksplus Total vs. Fundamental Indexplus Tr | Stocksplus Total vs. Stocksplus Fund Institutional |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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