Correlation Between Large Cap and James Balanced:

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

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

Diversification Opportunities for Large Cap and James Balanced:

0.65

Correlation Coefficient

Large Cap  James Balanced:

Poor diversification

The 3 months correlation between Large and James is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Fund and James Balanced Golden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James Balanced Golden and Large Cap 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 Large Cap Fund are associated (or correlated) with James Balanced:. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James Balanced Golden has no effect on the direction of Large Cap i.e., Large Cap and James Balanced: go up and down completely randomly.

Pair Corralation between Large Cap and James Balanced:

Assuming the 90 days horizon Large Cap Fund is expected to under-perform the James Balanced:. In addition to that, Large Cap is 2.67 times more volatile than James Balanced Golden. It trades about -0.17 of its total potential returns per unit of risk. James Balanced Golden is currently generating about -0.08 per unit of volatility. If you would invest  2,321  in James Balanced Golden on November 28, 2024 and sell it today you would lose (65.00) from holding James Balanced Golden or give up 2.8% of portfolio value over 90 days.

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

Large Cap Fund  vs.  James Balanced Golden

Large Cap Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Large Cap Fund 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 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.

James Balanced Golden

Risk-Adjusted Performance

Very Weak

Over the last 90 days James Balanced Golden has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, James Balanced: is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Large Cap and James Balanced:

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

The idea behind Large Cap Fund and James Balanced Golden 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.