Correlation Between Inverse Dow and Balanced Fund
Can any of the company-specific risk be diversified away by investing in both Inverse Dow and Balanced 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 Inverse Dow and Balanced Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inverse Dow 2x and Balanced Fund Retail, you can compare the effects of market volatilities on Inverse Dow and Balanced 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 Inverse Dow with a short position of Balanced Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inverse Dow and Balanced Fund.
Diversification Opportunities for Inverse Dow and Balanced Fund
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Inverse and Balanced is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Inverse Dow 2x and Balanced Fund Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balanced Fund Retail and Inverse Dow 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 Inverse Dow 2x are associated (or correlated) with Balanced Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balanced Fund Retail has no effect on the direction of Inverse Dow i.e., Inverse Dow and Balanced Fund go up and down completely randomly.
Pair Corralation between Inverse Dow and Balanced Fund
Assuming the 90 days horizon Inverse Dow 2x is expected to under-perform the Balanced Fund. In addition to that, Inverse Dow is 3.43 times more volatile than Balanced Fund Retail. It trades about -0.37 of its total potential returns per unit of risk. Balanced Fund Retail is currently generating about 0.25 per unit of volatility. If you would invest 1,407 in Balanced Fund Retail on September 3, 2024 and sell it today you would earn a total of 38.00 from holding Balanced Fund Retail or generate 2.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inverse Dow 2x vs. Balanced Fund Retail
Performance |
| Timeline |
| Inverse Dow 2x |
| Balanced Fund Retail |
Inverse Dow and Balanced Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inverse Dow and Balanced Fund
The main advantage of trading using opposite Inverse Dow and Balanced Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inverse Dow position performs unexpectedly, Balanced 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 Balanced Fund will offset losses from the drop in Balanced Fund's long position.| Inverse Dow vs. Ep Emerging Markets | Inverse Dow vs. Western Assets Emerging | Inverse Dow vs. Locorr Market Trend | Inverse Dow vs. Fundvantage Trust |
| Balanced Fund vs. Muirfield Fund Retail | Balanced Fund vs. Dynamic Growth Fund | Balanced Fund vs. Infrastructure Fund Retail | Balanced Fund vs. Quantex Fund Retail |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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