Correlation Between Sp 500 and Akre Focus
Can any of the company-specific risk be diversified away by investing in both Sp 500 and Akre Focus 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 Sp 500 and Akre Focus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sp 500 Index and Akre Focus Fund, you can compare the effects of market volatilities on Sp 500 and Akre Focus 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 Sp 500 with a short position of Akre Focus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sp 500 and Akre Focus.
Diversification Opportunities for Sp 500 and Akre Focus
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between USPRX and AKRE is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Sp 500 Index and Akre Focus Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akre Focus Fund and Sp 500 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 Sp 500 Index are associated (or correlated) with Akre Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akre Focus Fund has no effect on the direction of Sp 500 i.e., Sp 500 and Akre Focus go up and down completely randomly.
Pair Corralation between Sp 500 and Akre Focus
Assuming the 90 days horizon Sp 500 is expected to generate 1.35 times less return on investment than Akre Focus. In addition to that, Sp 500 is 1.07 times more volatile than Akre Focus Fund. It trades about 0.2 of its total potential returns per unit of risk. Akre Focus Fund is currently generating about 0.29 per unit of volatility. If you would invest 7,134 in Akre Focus Fund on August 29, 2024 and sell it today you would earn a total of 380.00 from holding Akre Focus Fund or generate 5.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sp 500 Index vs. Akre Focus Fund
Performance |
| Timeline |
| Sp 500 Index |
| Akre Focus Fund |
Sp 500 and Akre Focus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sp 500 and Akre Focus
The main advantage of trading using opposite Sp 500 and Akre Focus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sp 500 position performs unexpectedly, Akre Focus 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 Akre Focus will offset losses from the drop in Akre Focus' long position.| Sp 500 vs. Small Cap Stock | Sp 500 vs. Extended Market Index | Sp 500 vs. Value Fund Value | Sp 500 vs. Income Stock 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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