Correlation Between Science Technology and Gotham Hedged
Can any of the company-specific risk be diversified away by investing in both Science Technology and Gotham Hedged 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 Science Technology and Gotham Hedged into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Science Technology Fund and Gotham Hedged E, you can compare the effects of market volatilities on Science Technology and Gotham Hedged 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 Science Technology with a short position of Gotham Hedged. Check out your portfolio center. Please also check ongoing floating volatility patterns of Science Technology and Gotham Hedged.
Diversification Opportunities for Science Technology and Gotham Hedged
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Science and Gotham is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Science Technology Fund and Gotham Hedged E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gotham Hedged E and Science Technology 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 Science Technology Fund are associated (or correlated) with Gotham Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gotham Hedged E has no effect on the direction of Science Technology i.e., Science Technology and Gotham Hedged go up and down completely randomly.
Pair Corralation between Science Technology and Gotham Hedged
Assuming the 90 days horizon Science Technology Fund is expected to generate 2.23 times more return on investment than Gotham Hedged. However, Science Technology is 2.23 times more volatile than Gotham Hedged E. It trades about 0.08 of its potential returns per unit of risk. Gotham Hedged E is currently generating about 0.13 per unit of risk. If you would invest 2,009 in Science Technology Fund on September 2, 2024 and sell it today you would earn a total of 887.00 from holding Science Technology Fund or generate 44.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Science Technology Fund vs. Gotham Hedged E
Performance |
| Timeline |
| Science Technology |
| Gotham Hedged E |
Science Technology and Gotham Hedged Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Science Technology and Gotham Hedged
The main advantage of trading using opposite Science Technology and Gotham Hedged positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Science Technology position performs unexpectedly, Gotham Hedged 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 Gotham Hedged will offset losses from the drop in Gotham Hedged's long position.| Science Technology vs. Volumetric Fund Volumetric | Science Technology vs. Commonwealth Global Fund | Science Technology vs. Shelton Funds | Science Technology vs. Balanced Fund Investor |
| Gotham Hedged vs. Gotham Defensive Long | Gotham Hedged vs. Gotham Large Value | Gotham Hedged vs. Gotham Enhanced 500 | Gotham Hedged vs. Gotham Enhanced Return |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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