Correlation Between Sextant E and Sextant Growth
Can any of the company-specific risk be diversified away by investing in both Sextant E and Sextant 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 Sextant E and Sextant Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sextant E Fund and Sextant Growth Fund, you can compare the effects of market volatilities on Sextant E and Sextant 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 Sextant E with a short position of Sextant Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sextant E and Sextant Growth.
Diversification Opportunities for Sextant E and Sextant Growth
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sextant and Sextant is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sextant E Fund and Sextant Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sextant Growth and Sextant E 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 Sextant E Fund are associated (or correlated) with Sextant Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sextant Growth has no effect on the direction of Sextant E i.e., Sextant E and Sextant Growth go up and down completely randomly.
Pair Corralation between Sextant E and Sextant Growth
Assuming the 90 days horizon Sextant E is expected to generate 4.22 times less return on investment than Sextant Growth. But when comparing it to its historical volatility, Sextant E Fund is 2.21 times less risky than Sextant Growth. It trades about 0.1 of its potential returns per unit of risk. Sextant Growth Fund is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 5,722 in Sextant Growth Fund on September 14, 2024 and sell it today you would earn a total of 175.00 from holding Sextant Growth Fund or generate 3.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sextant E Fund vs. Sextant Growth Fund
Performance |
| Timeline |
| Sextant E Fund |
| Sextant Growth |
Sextant E and Sextant Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sextant E and Sextant Growth
The main advantage of trading using opposite Sextant E and Sextant Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sextant E position performs unexpectedly, Sextant 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 Sextant Growth will offset losses from the drop in Sextant Growth's long position.| Sextant E vs. Multisector Bond Sma | Sextant E vs. Alliancebernstein Bond | Sextant E vs. Ishares Municipal Bond | Sextant E vs. Ft 9331 Corporate |
| Sextant Growth vs. Sextant International Fund | Sextant Growth vs. Sextant Bond Income | Sextant Growth vs. Teton Westwood Equity | Sextant Growth vs. Value Line Premier |
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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