Correlation Between Selected American and Royce Premier
Can any of the company-specific risk be diversified away by investing in both Selected American and Royce Premier 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 Selected American and Royce Premier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Selected American Shares and Royce Premier Fund, you can compare the effects of market volatilities on Selected American and Royce Premier 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 Selected American with a short position of Royce Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selected American and Royce Premier.
Diversification Opportunities for Selected American and Royce Premier
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Selected and Royce is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Selected American Shares and Royce Premier Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royce Premier and Selected American 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 Selected American Shares are associated (or correlated) with Royce Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royce Premier has no effect on the direction of Selected American i.e., Selected American and Royce Premier go up and down completely randomly.
Pair Corralation between Selected American and Royce Premier
Assuming the 90 days horizon Selected American Shares is expected to generate 0.94 times more return on investment than Royce Premier. However, Selected American Shares is 1.07 times less risky than Royce Premier. It trades about 0.04 of its potential returns per unit of risk. Royce Premier Fund is currently generating about 0.0 per unit of risk. If you would invest 3,596 in Selected American Shares on November 5, 2024 and sell it today you would earn a total of 392.00 from holding Selected American Shares or generate 10.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Selected American Shares vs. Royce Premier Fund
Performance |
| Timeline |
| Selected American Shares |
| Royce Premier |
Selected American and Royce Premier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Selected American and Royce Premier
The main advantage of trading using opposite Selected American and Royce Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Selected American position performs unexpectedly, Royce Premier 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 Royce Premier will offset losses from the drop in Royce Premier's long position.| Selected American vs. Marsico Focus Fund | Selected American vs. Artisan International Fund | Selected American vs. Third Avenue Value | Selected American vs. Oakmark Select Fund |
| Royce Premier vs. Royce Total Return | Royce Premier vs. Royce Micro Cap Fund | Royce Premier vs. Growth Fund Of | Royce Premier vs. Royce Pennsylvania Mutual |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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