Correlation Between Banking Fund and Curasset Capital

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

By analyzing existing cross correlation between Banking Fund Investor and Curasset Capital Management, you can compare the effects of market volatilities on Banking Fund and Curasset Capital 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 Banking Fund with a short position of Curasset Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banking Fund and Curasset Capital.

Diversification Opportunities for Banking Fund and Curasset Capital

-0.18

Correlation Coefficient

Banking Fund  Curasset Capital

Good diversification

The 3 months correlation between Banking and Curasset is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Banking Fund Investor and Curasset Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Curasset Capital Man and Banking 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 Banking Fund Investor are associated (or correlated) with Curasset Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Curasset Capital Man has no effect on the direction of Banking Fund i.e., Banking Fund and Curasset Capital go up and down completely randomly.

Pair Corralation between Banking Fund and Curasset Capital

Assuming the 90 days horizon Banking Fund Investor is expected to generate 6.82 times more return on investment than Curasset Capital. However, Banking Fund is 6.82 times more volatile than Curasset Capital Management. It trades about 0.01 of its potential returns per unit of risk. Curasset Capital Management is currently generating about -0.12 per unit of risk. If you would invest  10,200  in Banking Fund Investor on October 6, 2024 and sell it today you would earn a total of  3.00  from holding Banking Fund Investor or generate 0.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

Banking Fund Investor  vs.  Curasset Capital Management

Banking Fund Investor

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Banking Fund Investor are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Banking Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Curasset Capital Man

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Banking Fund and Curasset Capital

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

The idea behind Banking Fund Investor and Curasset Capital Management 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.