Correlation Between Value Fund and Pro Blend
Can any of the company-specific risk be diversified away by investing in both Value Fund and Pro Blend 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 Value Fund and Pro Blend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Value Fund Investor and Pro Blend Extended Term, you can compare the effects of market volatilities on Value Fund and Pro Blend 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 Value Fund with a short position of Pro Blend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Value Fund and Pro Blend.
Diversification Opportunities for Value Fund and Pro Blend
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Value and Pro is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Value Fund Investor and Pro Blend Extended Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro Blend Extended and Value 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 Value Fund Investor are associated (or correlated) with Pro Blend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro Blend Extended has no effect on the direction of Value Fund i.e., Value Fund and Pro Blend go up and down completely randomly.
Pair Corralation between Value Fund and Pro Blend
Assuming the 90 days horizon Value Fund Investor is expected to under-perform the Pro Blend. In addition to that, Value Fund is 1.16 times more volatile than Pro Blend Extended Term. It trades about -0.09 of its total potential returns per unit of risk. Pro Blend Extended Term is currently generating about 0.1 per unit of volatility. If you would invest 2,049 in Pro Blend Extended Term on September 12, 2024 and sell it today you would earn a total of 19.00 from holding Pro Blend Extended Term or generate 0.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Value Fund Investor vs. Pro Blend Extended Term
Performance |
| Timeline |
| Value Fund Investor |
| Pro Blend Extended |
Value Fund and Pro Blend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Value Fund and Pro Blend
The main advantage of trading using opposite Value Fund and Pro Blend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Value Fund position performs unexpectedly, Pro Blend 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 Pro Blend will offset losses from the drop in Pro Blend's long position.| Value Fund vs. International Growth Fund | Value Fund vs. Growth Fund Investor | Value Fund vs. Equity Income Fund | Value Fund vs. Ultra Fund Investor |
| Pro Blend vs. Strategic Allocation Servative | Pro Blend vs. Strategic Allocation Aggressive | Pro Blend vs. Value Fund Investor | Pro Blend vs. International Growth Fund |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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