Correlation Between Sextant Bond and Value Line

Can any of the company-specific risk be diversified away by investing in both Sextant Bond and Value Line 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 Sextant Bond and Value Line into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sextant Bond Income and Value Line Premier, you can compare the effects of market volatilities on Sextant Bond and Value Line 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 Sextant Bond with a short position of Value Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sextant Bond and Value Line.

Diversification Opportunities for Sextant Bond and Value Line

-0.29

Correlation Coefficient

Sextant Bond  Value Line

Very good diversification

The 3 months correlation between Sextant and Value is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sextant Bond Income and Value Line Premier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Line Premier and Sextant Bond 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 Sextant Bond Income are associated (or correlated) with Value Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Line Premier has no effect on the direction of Sextant Bond i.e., Sextant Bond and Value Line go up and down completely randomly.

Pair Corralation between Sextant Bond and Value Line

Assuming the 90 days horizon Sextant Bond Income is expected to generate 0.48 times more return on investment than Value Line. However, Sextant Bond Income is 2.07 times less risky than Value Line. It trades about 0.14 of its potential returns per unit of risk. Value Line Premier is currently generating about -0.04 per unit of risk. If you would invest  436.00  in Sextant Bond Income on September 13, 2024 and sell it today you would earn a total of  5.00  from holding Sextant Bond Income or generate 1.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Sextant Bond Income  vs.  Value Line Premier

Sextant Bond Income

Risk-Adjusted Performance

0 of 100

Very Weak

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

Value Line Premier

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Sextant Bond and Value Line

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

The idea behind Sextant Bond Income and Value Line Premier 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.