Correlation Between Short-term Government and Value Fund
Can any of the company-specific risk be diversified away by investing in both Short-term Government 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 Short-term Government and Value 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 Value Fund I, you can compare the effects of market volatilities on Short-term Government 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 Short-term Government with a short position of Value Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short-term Government and Value Fund.
Diversification Opportunities for Short-term Government and Value Fund
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Short-term and Value is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Short Term Government 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 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 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 Short-term Government i.e., Short-term Government and Value Fund go up and down completely randomly.
Pair Corralation between Short-term Government and Value Fund
Assuming the 90 days horizon Short Term Government Fund is not expected to generate positive returns. However, Short Term Government Fund is 6.76 times less risky than Value Fund. It waists most of its returns potential to compensate for thr risk taken. Value Fund is generating about 0.3 per unit of risk. 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Short Term Government Fund vs. Value Fund I
Performance |
| Timeline |
| Short Term Government |
| Value Fund I |
Short-term Government and Value Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Short-term Government and Value Fund
The main advantage of trading using opposite Short-term Government and Value Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short-term Government 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.| Short-term Government vs. Government Bond Fund | Short-term Government vs. Ginnie Mae Fund | Short-term Government vs. Inflation Adjusted Bond Fund | Short-term Government vs. Balanced Fund Investor |
| 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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