Correlation Between Quantified Tactical and Spectrum Advisors

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

By analyzing existing cross correlation between Quantified Tactical Sectors and Spectrum Advisors Preferred, you can compare the effects of market volatilities on Quantified Tactical and Spectrum Advisors 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 Quantified Tactical with a short position of Spectrum Advisors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quantified Tactical and Spectrum Advisors.

Diversification Opportunities for Quantified Tactical and Spectrum Advisors

0.84

Correlation Coefficient

Quantified Tactical  Spectrum Advisors

Very poor diversification

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

Pair Corralation between Quantified Tactical and Spectrum Advisors

Assuming the 90 days horizon Quantified Tactical Sectors is expected to under-perform the Spectrum Advisors. In addition to that, Quantified Tactical is 2.58 times more volatile than Spectrum Advisors Preferred. It trades about -0.15 of its total potential returns per unit of risk. Spectrum Advisors Preferred is currently generating about -0.05 per unit of volatility. If you would invest  1,794  in Spectrum Advisors Preferred on December 31, 2024 and sell it today you would lose (33.00) from holding Spectrum Advisors Preferred or give up 1.84% of portfolio value over 90 days.

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

Quantified Tactical Sectors  vs.  Spectrum Advisors Preferred

Quantified Tactical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quantified Tactical Sectors has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Spectrum Advisors

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Quantified Tactical and Spectrum Advisors

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

The idea behind Quantified Tactical Sectors and Spectrum Advisors Preferred 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.