Correlation Between Equity Income and Value Fund
Can any of the company-specific risk be diversified away by investing in both Equity Income and Value 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 Equity Income and Value Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Income Fund and Value Fund I, you can compare the effects of market volatilities on Equity Income and Value 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 Equity Income with a short position of Value Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Income and Value Fund.
Diversification Opportunities for Equity Income and Value Fund
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Equity and Value is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Equity Income Fund and Value Fund I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Fund I and Equity Income 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 Equity Income Fund are associated (or correlated) with Value Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Fund I has no effect on the direction of Equity Income i.e., Equity Income and Value Fund go up and down completely randomly.
Pair Corralation between Equity Income and Value Fund
Assuming the 90 days horizon Equity Income is expected to generate 1.04 times less return on investment than Value Fund. In addition to that, Equity Income is 1.03 times more volatile than Value Fund I. It trades about 0.28 of its total potential returns per unit of risk. Value Fund I is currently generating about 0.3 per unit of volatility. If you would invest 771.00 in Value Fund I on November 3, 2024 and sell it today you would earn a total of 31.00 from holding Value Fund I or generate 4.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equity Income Fund vs. Value Fund I
Performance |
| Timeline |
| Equity Income |
| Value Fund I |
Equity Income and Value Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Income and Value Fund
The main advantage of trading using opposite Equity Income and Value Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Income position performs unexpectedly, Value 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 Value Fund will offset losses from the drop in Value Fund's long position.| Equity Income vs. Nexpoint Real Estate | Equity Income vs. Fidelity Real Estate | Equity Income vs. Redwood Real Estate | Equity Income vs. Jhancock Real Estate |
| Value Fund vs. Federated Government Income | Value Fund vs. Virtus Seix Government | Value Fund vs. Hsbc Government Money | Value Fund vs. Intermediate Government Bond |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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