Correlation Between Sound Shore and Total Return
Can any of the company-specific risk be diversified away by investing in both Sound Shore and Total Return 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 Sound Shore and Total Return into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sound Shore Fund and Total Return Fund, you can compare the effects of market volatilities on Sound Shore and Total Return 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 Sound Shore with a short position of Total Return. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sound Shore and Total Return.
Diversification Opportunities for Sound Shore and Total Return
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sound and Total is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sound Shore Fund and Total Return Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Return and Sound Shore 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 Sound Shore Fund are associated (or correlated) with Total Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Return has no effect on the direction of Sound Shore i.e., Sound Shore and Total Return go up and down completely randomly.
Pair Corralation between Sound Shore and Total Return
Assuming the 90 days horizon Sound Shore Fund is expected to generate 2.21 times more return on investment than Total Return. However, Sound Shore is 2.21 times more volatile than Total Return Fund. It trades about 0.14 of its potential returns per unit of risk. Total Return Fund is currently generating about 0.07 per unit of risk. If you would invest 3,779 in Sound Shore Fund on August 26, 2024 and sell it today you would earn a total of 1,208 from holding Sound Shore Fund or generate 31.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sound Shore Fund vs. Total Return Fund
Performance |
| Timeline |
| Sound Shore Fund |
| Total Return |
Sound Shore and Total Return Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sound Shore and Total Return
The main advantage of trading using opposite Sound Shore and Total Return positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sound Shore position performs unexpectedly, Total Return 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 Total Return will offset losses from the drop in Total Return's long position.| Sound Shore vs. Hartford Schroders Smallmid | Sound Shore vs. Hartford Schroders Smallmid | Sound Shore vs. Praxis Growth Index | Sound Shore vs. Ab E Opportunities |
| Total Return vs. Pender Real Estate | Total Return vs. Real Estate Fund | Total Return vs. Great West Real Estate | Total Return vs. Us Real Estate |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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