Correlation Between Rational Defensive and Aegis Value

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

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

Diversification Opportunities for Rational Defensive and Aegis Value

-0.06

Correlation Coefficient

Rational Defensive  Aegis Value

Good diversification

The 3 months correlation between Rational and Aegis is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Rational Defensive Growth and Aegis Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegis Value Fund and Rational Defensive 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 Rational Defensive Growth are associated (or correlated) with Aegis Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegis Value Fund has no effect on the direction of Rational Defensive i.e., Rational Defensive and Aegis Value go up and down completely randomly.

Pair Corralation between Rational Defensive and Aegis Value

Assuming the 90 days horizon Rational Defensive Growth is expected to under-perform the Aegis Value. But the mutual fund apears to be less risky and, when comparing its historical volatility, Rational Defensive Growth is 1.08 times less risky than Aegis Value. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Aegis Value Fund is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3,538  in Aegis Value Fund on December 21, 2024 and sell it today you would earn a total of  509.00  from holding Aegis Value Fund or generate 14.39% return on investment over 90 days.

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

Rational Defensive Growth  vs.  Aegis Value Fund

Rational Defensive Growth

Risk-Adjusted Performance

Very Weak

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

Aegis Value Fund

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aegis Value Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Aegis Value showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rational Defensive and Aegis Value

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

The idea behind Rational Defensive Growth and Aegis Value Fund 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 Anywhere module to track or share privately all of your investments from the convenience of any device.