Correlation Between Select Fund and Intermediate-term
Can any of the company-specific risk be diversified away by investing in both Select Fund and Intermediate-term 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 Intermediate-term 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 Intermediate Term Tax Free Bond, you can compare the effects of market volatilities on Select Fund and Intermediate-term 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 Intermediate-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Fund and Intermediate-term.
Diversification Opportunities for Select Fund and Intermediate-term
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Select and Intermediate-term is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Select Fund A and Intermediate Term Tax Free Bon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Term Tax 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 Intermediate-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Term Tax has no effect on the direction of Select Fund i.e., Select Fund and Intermediate-term go up and down completely randomly.
Pair Corralation between Select Fund and Intermediate-term
Assuming the 90 days horizon Select Fund A is expected to generate 5.53 times more return on investment than Intermediate-term. However, Select Fund is 5.53 times more volatile than Intermediate Term Tax Free Bond. It trades about 0.08 of its potential returns per unit of risk. Intermediate Term Tax Free Bond is currently generating about 0.03 per unit of risk. If you would invest 7,750 in Select Fund A on October 21, 2024 and sell it today you would earn a total of 3,951 from holding Select Fund A or generate 50.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Select Fund A vs. Intermediate Term Tax Free Bon
Performance |
| Timeline |
| Select Fund A |
| Intermediate Term Tax |
Select Fund and Intermediate-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Fund and Intermediate-term
The main advantage of trading using opposite Select Fund and Intermediate-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Fund position performs unexpectedly, Intermediate-term 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 Intermediate-term will offset losses from the drop in Intermediate-term'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 |
| Intermediate-term vs. Gamco Global Gold | Intermediate-term vs. Great West Goldman Sachs | Intermediate-term vs. Oppenheimer Gold Special | Intermediate-term vs. Precious Metals And |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |