Correlation Between Pro-blend(r) Extended and Equity Series

Can any of the company-specific risk be diversified away by investing in both Pro-blend(r) Extended and Equity Series 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 Pro-blend(r) Extended and Equity Series into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pro Blend Extended Term and Equity Series Class, you can compare the effects of market volatilities on Pro-blend(r) Extended and Equity Series 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 Pro-blend(r) Extended with a short position of Equity Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pro-blend(r) Extended and Equity Series.

Diversification Opportunities for Pro-blend(r) Extended and Equity Series

0.17

Correlation Coefficient

Pro-blend(r) Extended  Equity Series

Average diversification

The 3 months correlation between Pro-blend(r) and Equity is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Pro Blend Extended Term and Equity Series Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Series Class and Pro-blend(r) Extended 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 Pro Blend Extended Term are associated (or correlated) with Equity Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Series Class has no effect on the direction of Pro-blend(r) Extended i.e., Pro-blend(r) Extended and Equity Series go up and down completely randomly.

Pair Corralation between Pro-blend(r) Extended and Equity Series

Assuming the 90 days horizon Pro-blend(r) Extended is expected to generate 4.14 times less return on investment than Equity Series. But when comparing it to its historical volatility, Pro Blend Extended Term is 1.73 times less risky than Equity Series. It trades about 0.1 of its potential returns per unit of risk. Equity Series Class is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1,556  in Equity Series Class on September 6, 2024 and sell it today you would earn a total of  157.00  from holding Equity Series Class or generate 10.09% return on investment over 90 days.

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

Pro Blend Extended Term  vs.  Equity Series Class

Pro-blend(r) Extended

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pro Blend Extended Term are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pro-blend(r) Extended is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Equity Series Class

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Equity Series Class are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Equity Series may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pro-blend(r) Extended and Equity Series

The main advantage of trading using opposite Pro-blend(r) Extended and Equity Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pro-blend(r) Extended position performs unexpectedly, Equity Series 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 Equity Series will offset losses from the drop in Equity Series' long position.

The idea behind Pro Blend Extended Term and Equity Series Class 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..