Correlation Between Global Resources and Usa Mutuals

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

By analyzing existing cross correlation between Global Resources Fund and Usa Mutuals Vice, you can compare the effects of market volatilities on Global Resources and Usa Mutuals 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 Global Resources with a short position of Usa Mutuals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Resources and Usa Mutuals.

Diversification Opportunities for Global Resources and Usa Mutuals

0.82

Correlation Coefficient

Global Resources  Usa Mutuals

Very poor diversification

The 3 months correlation between Global and Usa is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Global Resources Fund and Usa Mutuals Vice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Usa Mutuals Vice and Global Resources 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 Global Resources Fund are associated (or correlated) with Usa Mutuals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Usa Mutuals Vice has no effect on the direction of Global Resources i.e., Global Resources and Usa Mutuals go up and down completely randomly.

Pair Corralation between Global Resources and Usa Mutuals

Assuming the 90 days horizon Global Resources Fund is expected to generate 1.16 times more return on investment than Usa Mutuals. However, Global Resources is 1.16 times more volatile than Usa Mutuals Vice. It trades about -0.07 of its potential returns per unit of risk. Usa Mutuals Vice is currently generating about -0.1 per unit of risk. If you would invest  398.00  in Global Resources Fund on October 26, 2024 and sell it today you would lose (18.00) from holding Global Resources Fund or give up 4.52% of portfolio value over 90 days.

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

Global Resources Fund  vs.  Usa Mutuals Vice

Global Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Usa Mutuals Vice

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Global Resources and Usa Mutuals

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

The idea behind Global Resources Fund and Usa Mutuals Vice 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.