Correlation Between Bruce Fund and Arbitrage Credit

Can any of the company-specific risk be diversified away by investing in both Bruce Fund and Arbitrage Credit 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 Bruce Fund and Arbitrage Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bruce Fund Bruce and The Arbitrage Credit, you can compare the effects of market volatilities on Bruce Fund and Arbitrage Credit 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 Bruce Fund with a short position of Arbitrage Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bruce Fund and Arbitrage Credit.

Diversification Opportunities for Bruce Fund and Arbitrage Credit

-0.55

Correlation Coefficient

Bruce Fund  Arbitrage Credit

Excellent diversification

The 3 months correlation between Bruce and Arbitrage is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bruce Fund Bruce and The Arbitrage Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbitrage Credit and Bruce 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 Bruce Fund Bruce are associated (or correlated) with Arbitrage Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbitrage Credit has no effect on the direction of Bruce Fund i.e., Bruce Fund and Arbitrage Credit go up and down completely randomly.

Pair Corralation between Bruce Fund and Arbitrage Credit

Assuming the 90 days horizon Bruce Fund Bruce is expected to under-perform the Arbitrage Credit. In addition to that, Bruce Fund is 6.36 times more volatile than The Arbitrage Credit. It trades about -0.09 of its total potential returns per unit of risk. The Arbitrage Credit is currently generating about 0.16 per unit of volatility. If you would invest  969.00  in The Arbitrage Credit on September 14, 2024 and sell it today you would earn a total of  8.00  from holding The Arbitrage Credit or generate 0.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bruce Fund Bruce  vs.  The Arbitrage Credit

Bruce Fund Bruce

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bruce Fund Bruce has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Bruce Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Arbitrage Credit

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Arbitrage Credit are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Arbitrage Credit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bruce Fund and Arbitrage Credit

The main advantage of trading using opposite Bruce Fund and Arbitrage Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bruce Fund position performs unexpectedly, Arbitrage Credit 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 Arbitrage Credit will offset losses from the drop in Arbitrage Credit's long position.

The idea behind Bruce Fund Bruce and The Arbitrage Credit pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.