Correlation Between Rational Special and Auer Growth
Can any of the company-specific risk be diversified away by investing in both Rational Special and Auer Growth 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 Rational Special and Auer Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rational Special Situations and Auer Growth Fund, you can compare the effects of market volatilities on Rational Special and Auer Growth 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 Rational Special with a short position of Auer Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rational Special and Auer Growth.
Diversification Opportunities for Rational Special and Auer Growth
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Rational and Auer is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Rational Special Situations and Auer Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auer Growth Fund and Rational Special 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 Rational Special Situations are associated (or correlated) with Auer Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auer Growth Fund has no effect on the direction of Rational Special i.e., Rational Special and Auer Growth go up and down completely randomly.
Pair Corralation between Rational Special and Auer Growth
Assuming the 90 days horizon Rational Special is expected to generate 2.25 times less return on investment than Auer Growth. But when comparing it to its historical volatility, Rational Special Situations is 11.86 times less risky than Auer Growth. It trades about 0.26 of its potential returns per unit of risk. Auer Growth Fund is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,358 in Auer Growth Fund on August 29, 2024 and sell it today you would earn a total of 404.00 from holding Auer Growth Fund or generate 29.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rational Special Situations vs. Auer Growth Fund
Performance |
| Timeline |
| Rational Special Sit |
| Auer Growth Fund |
Rational Special and Auer Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rational Special and Auer Growth
The main advantage of trading using opposite Rational Special and Auer Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rational Special position performs unexpectedly, Auer Growth 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 Auer Growth will offset losses from the drop in Auer Growth's long position.| Rational Special vs. Morgan Stanley Institutional | Rational Special vs. Rbc Funds Trust | Rational Special vs. Balanced Fund Investor | Rational Special vs. Small Cap Stock |
| Auer Growth vs. Lebenthal Lisanti Small | Auer Growth vs. Hodges Small Cap | Auer Growth vs. Schwartz Value Focused | Auer Growth vs. Oberweis Small Cap Opportunities |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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