Correlation Between Banking Fund and Consumer Products
Can any of the company-specific risk be diversified away by investing in both Banking Fund and Consumer Products 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 Banking Fund and Consumer Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banking Fund Investor and Consumer Products Fund, you can compare the effects of market volatilities on Banking Fund and Consumer Products 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 Banking Fund with a short position of Consumer Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banking Fund and Consumer Products.
Diversification Opportunities for Banking Fund and Consumer Products
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Banking and Consumer is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Banking Fund Investor and Consumer Products Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Products and Banking 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 Banking Fund Investor are associated (or correlated) with Consumer Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Products has no effect on the direction of Banking Fund i.e., Banking Fund and Consumer Products go up and down completely randomly.
Pair Corralation between Banking Fund and Consumer Products
Assuming the 90 days horizon Banking Fund Investor is expected to generate 1.74 times more return on investment than Consumer Products. However, Banking Fund is 1.74 times more volatile than Consumer Products Fund. It trades about 0.05 of its potential returns per unit of risk. Consumer Products Fund is currently generating about 0.02 per unit of risk. If you would invest 8,367 in Banking Fund Investor on September 2, 2024 and sell it today you would earn a total of 3,027 from holding Banking Fund Investor or generate 36.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banking Fund Investor vs. Consumer Products Fund
Performance |
| Timeline |
| Banking Fund Investor |
| Consumer Products |
Banking Fund and Consumer Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banking Fund and Consumer Products
The main advantage of trading using opposite Banking Fund and Consumer Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banking Fund position performs unexpectedly, Consumer Products 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 Consumer Products will offset losses from the drop in Consumer Products' long position.| Banking Fund vs. Financial Services Fund | Banking Fund vs. Health Care Fund | Banking Fund vs. Retailing Fund Investor | Banking Fund vs. Technology Fund Investor |
| Consumer Products vs. Health Care Fund | Consumer Products vs. Banking Fund Investor | Consumer Products vs. Retailing Fund Investor | Consumer Products vs. Financial Services Fund |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |