Correlation Between Europe 125x and Banking Fund
Can any of the company-specific risk be diversified away by investing in both Europe 125x and Banking Fund 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 Europe 125x and Banking Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Europe 125x Strategy and Banking Fund Class, you can compare the effects of market volatilities on Europe 125x and Banking Fund 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 Europe 125x with a short position of Banking Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europe 125x and Banking Fund.
Diversification Opportunities for Europe 125x and Banking Fund
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Europe and Banking is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Europe 125x Strategy and Banking Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banking Fund Class and Europe 125x 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 Europe 125x Strategy are associated (or correlated) with Banking Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banking Fund Class has no effect on the direction of Europe 125x i.e., Europe 125x and Banking Fund go up and down completely randomly.
Pair Corralation between Europe 125x and Banking Fund
Assuming the 90 days horizon Europe 125x is expected to generate 2.18 times less return on investment than Banking Fund. But when comparing it to its historical volatility, Europe 125x Strategy is 1.54 times less risky than Banking Fund. It trades about 0.03 of its potential returns per unit of risk. Banking Fund Class is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 7,352 in Banking Fund Class on August 27, 2024 and sell it today you would earn a total of 2,672 from holding Banking Fund Class or generate 36.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Europe 125x Strategy vs. Banking Fund Class
Performance |
| Timeline |
| Europe 125x Strategy |
| Banking Fund Class |
Europe 125x and Banking Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Europe 125x and Banking Fund
The main advantage of trading using opposite Europe 125x and Banking Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europe 125x position performs unexpectedly, Banking Fund 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 Banking Fund will offset losses from the drop in Banking Fund's long position.| Europe 125x vs. Rational Special Situations | Europe 125x vs. Qs Global Equity | Europe 125x vs. Ab Value Fund | Europe 125x vs. Archer Balanced Fund |
| Banking Fund vs. Qs Small Capitalization | Banking Fund vs. Massmutual Select Small | Banking Fund vs. Baird Smallmid Cap | Banking Fund vs. Kinetics Small Cap |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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