Correlation Between Select Fund and Sustainable Equity
Can any of the company-specific risk be diversified away by investing in both Select Fund and Sustainable Equity 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 Select Fund and Sustainable Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Select Fund A and Sustainable Equity Fund, you can compare the effects of market volatilities on Select Fund and Sustainable Equity 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 Select Fund with a short position of Sustainable Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Fund and Sustainable Equity.
Diversification Opportunities for Select Fund and Sustainable Equity
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Select and Sustainable is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Select Fund A and Sustainable Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sustainable Equity and Select Fund 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 Select Fund A are associated (or correlated) with Sustainable Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sustainable Equity has no effect on the direction of Select Fund i.e., Select Fund and Sustainable Equity go up and down completely randomly.
Pair Corralation between Select Fund and Sustainable Equity
Assuming the 90 days horizon Select Fund is expected to generate 1.1 times less return on investment than Sustainable Equity. In addition to that, Select Fund is 1.27 times more volatile than Sustainable Equity Fund. It trades about 0.26 of its total potential returns per unit of risk. Sustainable Equity Fund is currently generating about 0.36 per unit of volatility. If you would invest 5,554 in Sustainable Equity Fund on September 3, 2024 and sell it today you would earn a total of 300.00 from holding Sustainable Equity Fund or generate 5.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Select Fund A vs. Sustainable Equity Fund
Performance |
| Timeline |
| Select Fund A |
| Sustainable Equity |
Select Fund and Sustainable Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Fund and Sustainable Equity
The main advantage of trading using opposite Select Fund and Sustainable Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Fund position performs unexpectedly, Sustainable Equity 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 Sustainable Equity will offset losses from the drop in Sustainable Equity's long position.| Select Fund vs. Ultra Fund A | Select Fund vs. International Growth Fund | Select Fund vs. Select Fund I | Select Fund vs. Growth Fund A |
| Sustainable Equity vs. Vanguard Total Stock | Sustainable Equity vs. Vanguard 500 Index | Sustainable Equity vs. Vanguard Total Stock | Sustainable Equity vs. Vanguard Total Stock |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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