Correlation Between Dana Large and All Asset

Can any of the company-specific risk be diversified away by investing in both Dana Large and All Asset 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 All Asset 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 All Asset Fund, you can compare the effects of market volatilities on Dana Large and All Asset 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 All Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana Large and All Asset.

Diversification Opportunities for Dana Large and All Asset

0.74

Correlation Coefficient

Dana Large  All Asset

Poor diversification

The 3 months correlation between Dana and All is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Dana Large Cap and All Asset Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on All Asset Fund 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 All Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of All Asset Fund has no effect on the direction of Dana Large i.e., Dana Large and All Asset go up and down completely randomly.

Pair Corralation between Dana Large and All Asset

Assuming the 90 days horizon Dana Large Cap is expected to under-perform the All Asset. In addition to that, Dana Large is 7.76 times more volatile than All Asset Fund. It trades about -0.26 of its total potential returns per unit of risk. All Asset Fund is currently generating about -0.35 per unit of volatility. If you would invest  1,123  in All Asset Fund on October 15, 2024 and sell it today you would lose (41.00) from holding All Asset Fund or give up 3.65% of portfolio value over 90 days.

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

Dana Large Cap  vs.  All Asset Fund

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 February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

All Asset Fund

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Dana Large and All Asset

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

The idea behind Dana Large Cap and All Asset Fund 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.