Correlation Between Sextant Growth and Value Line
Can any of the company-specific risk be diversified away by investing in both Sextant Growth and Value Line 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 Growth and Value Line into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sextant Growth Fund and Value Line Premier, you can compare the effects of market volatilities on Sextant Growth and Value Line 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 Growth with a short position of Value Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sextant Growth and Value Line.
Diversification Opportunities for Sextant Growth and Value Line
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sextant and Value is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sextant Growth Fund and Value Line Premier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Line Premier and Sextant Growth 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 Growth Fund are associated (or correlated) with Value Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Line Premier has no effect on the direction of Sextant Growth i.e., Sextant Growth and Value Line go up and down completely randomly.
Pair Corralation between Sextant Growth and Value Line
Assuming the 90 days horizon Sextant Growth Fund is expected to generate 1.27 times more return on investment than Value Line. However, Sextant Growth is 1.27 times more volatile than Value Line Premier. It trades about 0.11 of its potential returns per unit of risk. Value Line Premier is currently generating about 0.09 per unit of risk. If you would invest 4,542 in Sextant Growth Fund on September 14, 2024 and sell it today you would earn a total of 1,280 from holding Sextant Growth Fund or generate 28.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Sextant Growth Fund vs. Value Line Premier
Performance |
| Timeline |
| Sextant Growth |
| Value Line Premier |
Sextant Growth and Value Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sextant Growth and Value Line
The main advantage of trading using opposite Sextant Growth and Value Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sextant Growth position performs unexpectedly, Value Line 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 Value Line will offset losses from the drop in Value Line's long position.| Sextant Growth vs. Sextant International Fund | Sextant Growth vs. Sextant Bond Income | Sextant Growth vs. Teton Westwood Equity | Sextant Growth vs. Value Line Premier |
| Value Line vs. Value Line Larger | Value Line vs. Value Line Mid | Value Line vs. Value Line Income | Value Line vs. Value Line Asset |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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