Correlation Between Dana Large and Cajxx

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

By analyzing existing cross correlation between Dana Large Cap and Cajxx, you can compare the effects of market volatilities on Dana Large and Cajxx 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 Dana Large with a short position of Cajxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana Large and Cajxx.

Diversification Opportunities for Dana Large and Cajxx

-0.38

Correlation Coefficient

Dana Large  Cajxx

Very good diversification

The 3 months correlation between Dana and Cajxx is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Dana Large Cap and Cajxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cajxx and Dana Large 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 Dana Large Cap are associated (or correlated) with Cajxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cajxx has no effect on the direction of Dana Large i.e., Dana Large and Cajxx go up and down completely randomly.

Pair Corralation between Dana Large and Cajxx

Assuming the 90 days horizon Dana Large Cap is expected to under-perform the Cajxx. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dana Large Cap is 24.07 times less risky than Cajxx. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Cajxx is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  521.00  in Cajxx on September 30, 2024 and sell it today you would lose (421.00) from holding Cajxx or give up 80.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

Dana Large Cap  vs.  Cajxx

Dana Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dana Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Cajxx

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cajxx are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Cajxx showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dana Large and Cajxx

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

The idea behind Dana Large Cap and Cajxx 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.