Correlation Between Select Fund and Short Term
Can any of the company-specific risk be diversified away by investing in both Select Fund and Short 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 Short 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 Short Term Government Fund, you can compare the effects of market volatilities on Select Fund and Short 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 Short Term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Fund and Short Term.
Diversification Opportunities for Select Fund and Short Term
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Select and Short is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Select Fund A and Short Term Government Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Term Government 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 Short Term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Term Government has no effect on the direction of Select Fund i.e., Select Fund and Short Term go up and down completely randomly.
Pair Corralation between Select Fund and Short Term
Assuming the 90 days horizon Select Fund A is expected to generate 6.69 times more return on investment than Short Term. However, Select Fund is 6.69 times more volatile than Short Term Government Fund. It trades about 0.08 of its potential returns per unit of risk. Short Term Government Fund is currently generating about 0.1 per unit of risk. If you would invest 9,093 in Select Fund A on September 2, 2024 and sell it today you would earn a total of 2,883 from holding Select Fund A or generate 31.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Select Fund A vs. Short Term Government Fund
Performance |
| Timeline |
| Select Fund A |
| Short Term Government |
Select Fund and Short Term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Fund and Short Term
The main advantage of trading using opposite Select Fund and Short Term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Fund position performs unexpectedly, Short 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 Short Term will offset losses from the drop in Short Term's long position.| Select Fund vs. Growth Fund Investor | Select Fund vs. Ultra Fund Investor | Select Fund vs. Heritage Fund Investor | Select Fund vs. International Growth Fund |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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