Correlation Between Sextant International and Sextant Bond
Can any of the company-specific risk be diversified away by investing in both Sextant International and Sextant Bond 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 International and Sextant Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sextant International Fund and Sextant Bond Income, you can compare the effects of market volatilities on Sextant International and Sextant Bond 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 International with a short position of Sextant Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sextant International and Sextant Bond.
Diversification Opportunities for Sextant International and Sextant Bond
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sextant and Sextant is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Sextant International Fund and Sextant Bond Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sextant Bond Income and Sextant International 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 International Fund are associated (or correlated) with Sextant Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sextant Bond Income has no effect on the direction of Sextant International i.e., Sextant International and Sextant Bond go up and down completely randomly.
Pair Corralation between Sextant International and Sextant Bond
Assuming the 90 days horizon Sextant International Fund is expected to under-perform the Sextant Bond. In addition to that, Sextant International is 2.0 times more volatile than Sextant Bond Income. It trades about -0.09 of its total potential returns per unit of risk. Sextant Bond Income is currently generating about -0.01 per unit of volatility. If you would invest 442.00 in Sextant Bond Income on September 13, 2024 and sell it today you would lose (1.00) from holding Sextant Bond Income or give up 0.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sextant International Fund vs. Sextant Bond Income
Performance |
| Timeline |
| Sextant International |
| Sextant Bond Income |
Sextant International and Sextant Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sextant International and Sextant Bond
The main advantage of trading using opposite Sextant International and Sextant Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sextant International position performs unexpectedly, Sextant Bond 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 Bond will offset losses from the drop in Sextant Bond's long position.| Sextant International vs. Sextant Growth Fund | Sextant International vs. Amana Income Fund | Sextant International vs. Amana Growth Fund | Sextant International vs. Sextant Bond Income |
| Sextant Bond vs. Sextant Growth Fund | Sextant Bond vs. Sextant International Fund | Sextant Bond vs. Sextant Short Term Bond | Sextant Bond vs. Sextant E Fund |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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