Correlation Between Pfg American and Riskproreg

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

By analyzing existing cross correlation between Pfg American Funds and Riskproreg 30 Fund, you can compare the effects of market volatilities on Pfg American and Riskproreg 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 Pfg American with a short position of Riskproreg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfg American and Riskproreg.

Diversification Opportunities for Pfg American and Riskproreg

0.93

Correlation Coefficient

Pfg American  Riskproreg

Almost no diversification

The 3 months correlation between Pfg and Riskproreg is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Pfg American Funds and Riskproreg 30 Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riskproreg 30 and Pfg American 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 Pfg American Funds are associated (or correlated) with Riskproreg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riskproreg 30 has no effect on the direction of Pfg American i.e., Pfg American and Riskproreg go up and down completely randomly.

Pair Corralation between Pfg American and Riskproreg

Assuming the 90 days horizon Pfg American Funds is expected to generate 1.12 times more return on investment than Riskproreg. However, Pfg American is 1.12 times more volatile than Riskproreg 30 Fund. It trades about 0.06 of its potential returns per unit of risk. Riskproreg 30 Fund is currently generating about 0.04 per unit of risk. If you would invest  1,218  in Pfg American Funds on September 22, 2024 and sell it today you would earn a total of  82.00  from holding Pfg American Funds or generate 6.73% return on investment over 90 days.

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

Pfg American Funds  vs.  Riskproreg 30 Fund

Pfg American Funds

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pfg American Funds are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Pfg American is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Riskproreg 30

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Riskproreg 30 Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Riskproreg is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pfg American and Riskproreg

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

The idea behind Pfg American Funds and Riskproreg 30 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.