Correlation Between Elfun Government and Mutual Quest

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Can any of the company-specific risk be diversified away by investing in both Elfun Government and Mutual Quest 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 Elfun Government and Mutual Quest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elfun Government Money and Mutual Quest, you can compare the effects of market volatilities on Elfun Government and Mutual Quest 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 Elfun Government with a short position of Mutual Quest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elfun Government and Mutual Quest.

Diversification Opportunities for Elfun Government and Mutual Quest

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Elfun and Mutual is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Elfun Government Money and Mutual Quest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mutual Quest and Elfun Government 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 Elfun Government Money are associated (or correlated) with Mutual Quest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mutual Quest has no effect on the direction of Elfun Government i.e., Elfun Government and Mutual Quest go up and down completely randomly.

Pair Corralation between Elfun Government and Mutual Quest

Assuming the 90 days horizon Elfun Government Money is expected to generate 49.14 times more return on investment than Mutual Quest. However, Elfun Government is 49.14 times more volatile than Mutual Quest. It trades about 0.06 of its potential returns per unit of risk. Mutual Quest is currently generating about 0.03 per unit of risk. If you would invest  370.00  in Elfun Government Money on October 4, 2024 and sell it today you would lose (270.00) from holding Elfun Government Money or give up 72.97% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy97.83%
ValuesDaily Returns

Elfun Government Money  vs.  Mutual Quest

 Performance 
       Timeline  
Elfun Government Money 

Risk-Adjusted Performance

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

Risk-Adjusted Performance

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

Elfun Government and Mutual Quest Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Elfun Government and Mutual Quest

The main advantage of trading using opposite Elfun Government and Mutual Quest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elfun Government position performs unexpectedly, Mutual Quest 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 Mutual Quest will offset losses from the drop in Mutual Quest's long position.
The idea behind Elfun Government Money and Mutual Quest 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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