Correlation Between Total Return and Performance Trust
Can any of the company-specific risk be diversified away by investing in both Total Return and Performance Trust 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 Total Return and Performance Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Total Return Fund and Performance Trust Strategic, you can compare the effects of market volatilities on Total Return and Performance Trust 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 Total Return with a short position of Performance Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Return and Performance Trust.
Diversification Opportunities for Total Return and Performance Trust
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between TOTAL and Performance is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Total Return Fund and Performance Trust Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Trust and Total Return 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 Total Return Fund are associated (or correlated) with Performance Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Trust has no effect on the direction of Total Return i.e., Total Return and Performance Trust go up and down completely randomly.
Pair Corralation between Total Return and Performance Trust
Assuming the 90 days horizon Total Return is expected to generate 1.18 times less return on investment than Performance Trust. But when comparing it to its historical volatility, Total Return Fund is 1.03 times less risky than Performance Trust. It trades about 0.1 of its potential returns per unit of risk. Performance Trust Strategic is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,965 in Performance Trust Strategic on August 29, 2024 and sell it today you would earn a total of 19.00 from holding Performance Trust Strategic or generate 0.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Total Return Fund vs. Performance Trust Strategic
Performance |
| Timeline |
| Total Return |
| Performance Trust |
Total Return and Performance Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Total Return and Performance Trust
The main advantage of trading using opposite Total Return and Performance Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Total Return position performs unexpectedly, Performance Trust 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 Performance Trust will offset losses from the drop in Performance Trust's long position.| Total Return vs. Royce Global Financial | Total Return vs. Gabelli Global Financial | Total Return vs. First Trust Specialty | Total Return vs. Hennessy Large Cap |
| Performance Trust vs. Transamerica Financial Life | Performance Trust vs. Financials Ultrasector Profund | Performance Trust vs. Icon Financial Fund | Performance Trust vs. Angel Oak Financial |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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