Correlation Between Short-term Government and Select Fund
Can any of the company-specific risk be diversified away by investing in both Short-term Government and Select Fund 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 Short-term Government and Select Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Short Term Government Fund and Select Fund Investor, you can compare the effects of market volatilities on Short-term Government and Select Fund 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 Short-term Government with a short position of Select Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short-term Government and Select Fund.
Diversification Opportunities for Short-term Government and Select Fund
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Short-term and Select is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Short Term Government Fund and Select Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Fund Investor and Short-term Government 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 Short Term Government Fund are associated (or correlated) with Select Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Fund Investor has no effect on the direction of Short-term Government i.e., Short-term Government and Select Fund go up and down completely randomly.
Pair Corralation between Short-term Government and Select Fund
Assuming the 90 days horizon Short Term Government Fund is expected to under-perform the Select Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Short Term Government Fund is 8.04 times less risky than Select Fund. The mutual fund trades about -0.15 of its potential returns per unit of risk. The Select Fund Investor is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 12,103 in Select Fund Investor on August 30, 2024 and sell it today you would earn a total of 408.00 from holding Select Fund Investor or generate 3.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Short Term Government Fund vs. Select Fund Investor
Performance |
| Timeline |
| Short Term Government |
| Select Fund Investor |
Short-term Government and Select Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Short-term Government and Select Fund
The main advantage of trading using opposite Short-term Government and Select Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short-term Government position performs unexpectedly, Select Fund 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 Select Fund will offset losses from the drop in Select Fund's long position.| Short-term Government vs. Pace Large Value | Short-term Government vs. Goldman Sachs Large | Short-term Government vs. Tax Managed Large Cap | Short-term Government vs. Dodge Cox Stock |
| Select Fund vs. Growth Fund Investor | Select Fund vs. Ultra Fund Investor | Select Fund vs. Heritage Fund Investor | Select Fund vs. International Growth 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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