Correlation Between Quantex Fund and Spectrum Fund

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

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

Diversification Opportunities for Quantex Fund and Spectrum Fund

0.82

Correlation Coefficient

Quantex Fund  Spectrum Fund

Very poor diversification

The 3 months correlation between Quantex and Spectrum is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Quantex Fund Retail and Spectrum Fund Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectrum Fund Instit and Quantex Fund 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 Quantex Fund Retail are associated (or correlated) with Spectrum Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectrum Fund Instit has no effect on the direction of Quantex Fund i.e., Quantex Fund and Spectrum Fund go up and down completely randomly.

Pair Corralation between Quantex Fund and Spectrum Fund

Assuming the 90 days horizon Quantex Fund Retail is expected to generate 0.98 times more return on investment than Spectrum Fund. However, Quantex Fund Retail is 1.02 times less risky than Spectrum Fund. It trades about -0.02 of its potential returns per unit of risk. Spectrum Fund Institutional is currently generating about -0.08 per unit of risk. If you would invest  3,451  in Quantex Fund Retail on December 30, 2024 and sell it today you would lose (49.00) from holding Quantex Fund Retail or give up 1.42% of portfolio value over 90 days.

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

Quantex Fund Retail  vs.  Spectrum Fund Institutional

Quantex Fund Retail

Risk-Adjusted Performance

Very Weak

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

Spectrum Fund Instit

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Quantex Fund and Spectrum Fund

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

The idea behind Quantex Fund Retail and Spectrum Fund Institutional 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.