Correlation Between Issachar Fund and Government Street

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

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

Diversification Opportunities for Issachar Fund and Government Street

0.88

Correlation Coefficient

Issachar Fund  Government Street

Very poor diversification

The 3 months correlation between Issachar and Government is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Issachar Fund Class and Government Street Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Government Street Equity and Issachar 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 Issachar Fund Class are associated (or correlated) with Government Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Government Street Equity has no effect on the direction of Issachar Fund i.e., Issachar Fund and Government Street go up and down completely randomly.

Pair Corralation between Issachar Fund and Government Street

Assuming the 90 days horizon Issachar Fund is expected to generate 5.58 times less return on investment than Government Street. In addition to that, Issachar Fund is 1.08 times more volatile than Government Street Equity. It trades about 0.02 of its total potential returns per unit of risk. Government Street Equity is currently generating about 0.13 per unit of volatility. If you would invest  9,870  in Government Street Equity on October 7, 2024 and sell it today you would earn a total of  3,022  from holding Government Street Equity or generate 30.62% return on investment over 90 days.

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

Issachar Fund Class  vs.  Government Street Equity

Issachar Fund Class

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Issachar Fund Class are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Issachar Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Government Street Equity

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Government Street Equity are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Government Street is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Issachar Fund and Government Street

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

The idea behind Issachar Fund Class and Government Street Equity 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.