Correlation Between Global Real and Select Us

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

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

Diversification Opportunities for Global Real and Select Us

-0.53

Correlation Coefficient

Global Real  Select Us

Excellent diversification

The 3 months correlation between Global and Select is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Global Real Estate and Select Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Equity and Global Real 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 Real Estate are associated (or correlated) with Select Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Equity has no effect on the direction of Global Real i.e., Global Real and Select Us go up and down completely randomly.

Pair Corralation between Global Real and Select Us

Assuming the 90 days horizon Global Real Estate is expected to under-perform the Select Us. But the mutual fund apears to be less risky and, when comparing its historical volatility, Global Real Estate is 1.0 times less risky than Select Us. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Select Equity Fund is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,863  in Select Equity Fund on September 5, 2024 and sell it today you would earn a total of  218.00  from holding Select Equity Fund or generate 11.7% return on investment over 90 days.

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

Global Real Estate  vs.  Select Equity Fund

Global Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Select Equity

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Select Equity Fund are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Select Us may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Global Real and Select Us

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

The idea behind Global Real Estate and Select Equity 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.