Correlation Between Short-term Fund and 09951LAA1

Can any of the company-specific risk be diversified away by investing in both Short-term Fund and 09951LAA1 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 Short-term Fund and 09951LAA1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Short Term Fund A and BOOZ ALLEN HAMILTON, you can compare the effects of market volatilities on Short-term Fund and 09951LAA1 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 Short-term Fund with a short position of 09951LAA1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short-term Fund and 09951LAA1.

Diversification Opportunities for Short-term Fund and 09951LAA1

-0.64

Correlation Coefficient

Short-term Fund  09951LAA1

Excellent diversification

The 3 months correlation between Short-term and 09951LAA1 is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Short Term Fund A and BOOZ ALLEN HAMILTON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOOZ ALLEN HAMILTON and Short-term 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 Short Term Fund A are associated (or correlated) with 09951LAA1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOOZ ALLEN HAMILTON has no effect on the direction of Short-term Fund i.e., Short-term Fund and 09951LAA1 go up and down completely randomly.

Pair Corralation between Short-term Fund and 09951LAA1

Assuming the 90 days horizon Short-term Fund is expected to generate 98.02 times less return on investment than 09951LAA1. But when comparing it to its historical volatility, Short Term Fund A is 517.74 times less risky than 09951LAA1. It trades about 0.23 of its potential returns per unit of risk. BOOZ ALLEN HAMILTON is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  8,929  in BOOZ ALLEN HAMILTON on October 5, 2024 and sell it today you would earn a total of  739.00  from holding BOOZ ALLEN HAMILTON or generate 8.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	87.58%
Values	Daily Returns

Short Term Fund A  vs.  BOOZ ALLEN HAMILTON

Short Term Fund

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Short Term Fund A are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Short-term Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BOOZ ALLEN HAMILTON

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BOOZ ALLEN HAMILTON has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 09951LAA1 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Short-term Fund and 09951LAA1

The main advantage of trading using opposite Short-term Fund and 09951LAA1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short-term Fund position performs unexpectedly, 09951LAA1 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 09951LAA1 will offset losses from the drop in 09951LAA1's long position.

The idea behind Short Term Fund A and BOOZ ALLEN HAMILTON 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.