Correlation Between Income Fund and Stringer Growth
Can any of the company-specific risk be diversified away by investing in both Income Fund and Stringer 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 Income Fund and Stringer Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Income Fund Of and Stringer Growth Fund, you can compare the effects of market volatilities on Income Fund and Stringer 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 Income Fund with a short position of Stringer Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Income Fund and Stringer Growth.
Diversification Opportunities for Income Fund and Stringer Growth
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Income and Stringer is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Income Fund Of and Stringer Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stringer Growth and Income Fund 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 Income Fund Of are associated (or correlated) with Stringer Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stringer Growth has no effect on the direction of Income Fund i.e., Income Fund and Stringer Growth go up and down completely randomly.
Pair Corralation between Income Fund and Stringer Growth
Assuming the 90 days horizon Income Fund is expected to generate 1.51 times less return on investment than Stringer Growth. But when comparing it to its historical volatility, Income Fund Of is 1.27 times less risky than Stringer Growth. It trades about 0.14 of its potential returns per unit of risk. Stringer Growth Fund is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,281 in Stringer Growth Fund on August 31, 2024 and sell it today you would earn a total of 25.00 from holding Stringer Growth Fund or generate 1.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Income Fund Of vs. Stringer Growth Fund
Performance |
| Timeline |
| Income Fund |
| Stringer Growth |
Income Fund and Stringer Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Income Fund and Stringer Growth
The main advantage of trading using opposite Income Fund and Stringer Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Income Fund position performs unexpectedly, Stringer 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 Stringer Growth will offset losses from the drop in Stringer Growth's long position.| Income Fund vs. Kinetics Global Fund | Income Fund vs. T Rowe Price | Income Fund vs. Federated Global Allocation | Income Fund vs. Commonwealth Global Fund |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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