Correlation Between Sextant Short and Sextant Global

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

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

Diversification Opportunities for Sextant Short and Sextant Global

0.46

Correlation Coefficient

Sextant Short  Sextant Global

Very weak diversification

The 3 months correlation between Sextant and Sextant is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Sextant Short Term Bond and Sextant Global High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sextant Global High and Sextant Short 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 Short Term Bond are associated (or correlated) with Sextant Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sextant Global High has no effect on the direction of Sextant Short i.e., Sextant Short and Sextant Global go up and down completely randomly.

Pair Corralation between Sextant Short and Sextant Global

Assuming the 90 days horizon Sextant Short Term Bond is expected to generate 0.25 times more return on investment than Sextant Global. However, Sextant Short Term Bond is 3.94 times less risky than Sextant Global. It trades about 0.0 of its potential returns per unit of risk. Sextant Global High is currently generating about -0.02 per unit of risk. If you would invest  495.00  in Sextant Short Term Bond on September 13, 2024 and sell it today you would earn a total of  0.00  from holding Sextant Short Term Bond or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Sextant Short Term Bond  vs.  Sextant Global High

Sextant Short Term

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sextant Global High

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sextant Global High has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Sextant Global 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 Short and Sextant Global

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

The idea behind Sextant Short Term Bond and Sextant Global High 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.