Correlation Between Electronics Fund and Sierra Core
Can any of the company-specific risk be diversified away by investing in both Electronics Fund and Sierra Core 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 Electronics Fund and Sierra Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronics Fund Class and Sierra E Retirement, you can compare the effects of market volatilities on Electronics Fund and Sierra Core 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 Electronics Fund with a short position of Sierra Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronics Fund and Sierra Core.
Diversification Opportunities for Electronics Fund and Sierra Core
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Electronics and Sierra is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Electronics Fund Class and Sierra E Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sierra E Retirement and Electronics 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 Electronics Fund Class are associated (or correlated) with Sierra Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sierra E Retirement has no effect on the direction of Electronics Fund i.e., Electronics Fund and Sierra Core go up and down completely randomly.
Pair Corralation between Electronics Fund and Sierra Core
Assuming the 90 days horizon Electronics Fund Class is expected to under-perform the Sierra Core. In addition to that, Electronics Fund is 6.78 times more volatile than Sierra E Retirement. It trades about -0.04 of its total potential returns per unit of risk. Sierra E Retirement is currently generating about 0.23 per unit of volatility. If you would invest 2,259 in Sierra E Retirement on October 31, 2024 and sell it today you would earn a total of 40.00 from holding Sierra E Retirement or generate 1.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Electronics Fund Class vs. Sierra E Retirement
Performance |
| Timeline |
| Electronics Fund Class |
| Sierra E Retirement |
Electronics Fund and Sierra Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronics Fund and Sierra Core
The main advantage of trading using opposite Electronics Fund and Sierra Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronics Fund position performs unexpectedly, Sierra Core 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 Sierra Core will offset losses from the drop in Sierra Core's long position.| Electronics Fund vs. Basic Materials Fund | Electronics Fund vs. Basic Materials Fund | Electronics Fund vs. Banking Fund Class | Electronics Fund vs. Basic Materials Fund |
| Sierra Core vs. Rational Strategic Allocation | Sierra Core vs. Franklin Moderate Allocation | Sierra Core vs. Alternative Asset Allocation | Sierra Core vs. Enhanced Large Pany |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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