Correlation Between International Core and Us High

Can any of the company-specific risk be diversified away by investing in both International Core and Us High 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 International Core and Us High into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between International E Equity and Us High Relative, you can compare the effects of market volatilities on International Core and Us High 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 International Core with a short position of Us High. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Core and Us High.

Diversification Opportunities for International Core and Us High

0.15

Correlation Coefficient

International Core  Us High

Average diversification

The 3 months correlation between International and DURPX is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding International E Equity and Us High Relative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us High Relative and International Core 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 International E Equity are associated (or correlated) with Us High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us High Relative has no effect on the direction of International Core i.e., International Core and Us High go up and down completely randomly.

Pair Corralation between International Core and Us High

Assuming the 90 days horizon International E Equity is expected to under-perform the Us High. But the mutual fund apears to be less risky and, when comparing its historical volatility, International E Equity is 1.27 times less risky than Us High. The mutual fund trades about -0.27 of its potential returns per unit of risk. The Us High Relative is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest  2,519  in Us High Relative on October 14, 2024 and sell it today you would lose (86.00) from holding Us High Relative or give up 3.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

International E Equity  vs.  Us High Relative

International E Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International E Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Us High Relative

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with International Core and Us High

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

The idea behind International E Equity and Us High Relative 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.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.