Correlation Between Permanent Portfolio and Greenspring Fund

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

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

Diversification Opportunities for Permanent Portfolio and Greenspring Fund

0.84

Correlation Coefficient

Permanent Portfolio  Greenspring Fund

Very poor diversification

The 3 months correlation between Permanent and Greenspring is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Permanent Portfolio Class and Greenspring Fund Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenspring Fund Retail and Permanent Portfolio 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 Permanent Portfolio Class are associated (or correlated) with Greenspring Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenspring Fund Retail has no effect on the direction of Permanent Portfolio i.e., Permanent Portfolio and Greenspring Fund go up and down completely randomly.

Pair Corralation between Permanent Portfolio and Greenspring Fund

Assuming the 90 days horizon Permanent Portfolio Class is expected to generate 0.62 times more return on investment than Greenspring Fund. However, Permanent Portfolio Class is 1.62 times less risky than Greenspring Fund. It trades about 0.11 of its potential returns per unit of risk. Greenspring Fund Retail is currently generating about 0.04 per unit of risk. If you would invest  4,591  in Permanent Portfolio Class on September 16, 2024 and sell it today you would earn a total of  1,558  from holding Permanent Portfolio Class or generate 33.94% return on investment over 90 days.

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

Permanent Portfolio Class  vs.  Greenspring Fund Retail

Permanent Portfolio Class

Risk-Adjusted Performance

6 of 100

Modest

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

Greenspring Fund Retail

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Greenspring Fund Retail are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Greenspring Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Permanent Portfolio and Greenspring Fund

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

The idea behind Permanent Portfolio Class and Greenspring Fund Retail 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.