Correlation Between Infrastructure Fund and Balanced Fund

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

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

Diversification Opportunities for Infrastructure Fund and Balanced Fund

0.63

Correlation Coefficient

Infrastructure Fund  Balanced Fund

Poor diversification

The 3 months correlation between Infrastructure and BALANCED is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Infrastructure Fund Retail and Balanced Fund Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balanced Fund Instit and Infrastructure 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 Infrastructure Fund Retail are associated (or correlated) with Balanced Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balanced Fund Instit has no effect on the direction of Infrastructure Fund i.e., Infrastructure Fund and Balanced Fund go up and down completely randomly.

Pair Corralation between Infrastructure Fund and Balanced Fund

Assuming the 90 days horizon Infrastructure Fund Retail is expected to generate 0.25 times more return on investment than Balanced Fund. However, Infrastructure Fund Retail is 4.08 times less risky than Balanced Fund. It trades about -0.02 of its potential returns per unit of risk. Balanced Fund Institutional is currently generating about -0.13 per unit of risk. If you would invest  2,362  in Infrastructure Fund Retail on December 2, 2024 and sell it today you would lose (13.00) from holding Infrastructure Fund Retail or give up 0.55% of portfolio value over 90 days.

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

Infrastructure Fund Retail  vs.  Balanced Fund Institutional

Infrastructure Fund

Risk-Adjusted Performance

Very Weak

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

Balanced Fund Instit

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Infrastructure Fund and Balanced Fund

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

The idea behind Infrastructure Fund Retail and Balanced 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.