Correlation Between Total Return and Muirfield Fund

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

By analyzing existing cross correlation between Total Return Bond and Muirfield Fund Retail, you can compare the effects of market volatilities on Total Return and Muirfield Fund 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 Total Return with a short position of Muirfield Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Return and Muirfield Fund.

Diversification Opportunities for Total Return and Muirfield Fund

-0.02

Correlation Coefficient

Total Return  Muirfield Fund

Good diversification

The 3 months correlation between TOTAL and Muirfield is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Total Return Bond and Muirfield Fund Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Muirfield Fund Retail and Total Return 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 Total Return Bond are associated (or correlated) with Muirfield Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Muirfield Fund Retail has no effect on the direction of Total Return i.e., Total Return and Muirfield Fund go up and down completely randomly.

Pair Corralation between Total Return and Muirfield Fund

Assuming the 90 days horizon Total Return Bond is expected to generate 0.09 times more return on investment than Muirfield Fund. However, Total Return Bond is 10.68 times less risky than Muirfield Fund. It trades about 0.17 of its potential returns per unit of risk. Muirfield Fund Retail is currently generating about -0.13 per unit of risk. If you would invest  941.00  in Total Return Bond on December 2, 2024 and sell it today you would earn a total of  18.00  from holding Total Return Bond or generate 1.91% return on investment over 90 days.

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

Total Return Bond  vs.  Muirfield Fund Retail

Total Return Bond

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Total Return Bond are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Total Return is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Muirfield Fund Retail

Risk-Adjusted Performance

Very Weak

Over the last 90 days Muirfield Fund Retail 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 technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Total Return and Muirfield Fund

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

The idea behind Total Return Bond and Muirfield Fund Retail 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.