Correlation Between Spectrum Fund and Quantex Fund

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

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

Diversification Opportunities for Spectrum Fund and Quantex Fund

0.97

Correlation Coefficient

Spectrum Fund  Quantex Fund

Almost no diversification

The 3 months correlation between Spectrum and Quantex is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Spectrum Fund Retail and Quantex Fund Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantex Fund Retail and Spectrum 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 Spectrum Fund Retail are associated (or correlated) with Quantex Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantex Fund Retail has no effect on the direction of Spectrum Fund i.e., Spectrum Fund and Quantex Fund go up and down completely randomly.

Pair Corralation between Spectrum Fund and Quantex Fund

Assuming the 90 days horizon Spectrum Fund Retail is expected to generate 0.58 times more return on investment than Quantex Fund. However, Spectrum Fund Retail is 1.72 times less risky than Quantex Fund. It trades about -0.05 of its potential returns per unit of risk. Quantex Fund Retail is currently generating about -0.09 per unit of risk. If you would invest  1,475  in Spectrum Fund Retail on November 20, 2024 and sell it today you would lose (65.00) from holding Spectrum Fund Retail or give up 4.41% of portfolio value over 90 days.

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

Spectrum Fund Retail  vs.  Quantex Fund Retail

Spectrum Fund Retail

Risk-Adjusted Performance

Very Weak

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

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

Pair Trading with Spectrum Fund and Quantex Fund

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

The idea behind Spectrum Fund Retail and Quantex 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.

Check out your portfolio center.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.