Correlation Between Sextant Short-term and Sextant Growth

Can any of the company-specific risk be diversified away by investing in both Sextant Short-term and Sextant Growth 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-term and Sextant Growth 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 Growth Fund, you can compare the effects of market volatilities on Sextant Short-term and Sextant Growth 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-term with a short position of Sextant Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sextant Short-term and Sextant Growth.

Diversification Opportunities for Sextant Short-term and Sextant Growth

-0.78

Correlation Coefficient

Sextant Short-term  Sextant Growth

Pay attention - limited upside

The 3 months correlation between Sextant and Sextant is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sextant Short Term Bond and Sextant Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sextant Growth and Sextant Short-term 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 Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sextant Growth has no effect on the direction of Sextant Short-term i.e., Sextant Short-term and Sextant Growth go up and down completely randomly.

Pair Corralation between Sextant Short-term and Sextant Growth

Assuming the 90 days horizon Sextant Short Term Bond is expected to generate 0.1 times more return on investment than Sextant Growth. However, Sextant Short Term Bond is 10.13 times less risky than Sextant Growth. It trades about 0.19 of its potential returns per unit of risk. Sextant Growth Fund is currently generating about -0.13 per unit of risk. If you would invest  490.00  in Sextant Short Term Bond on December 29, 2024 and sell it today you would earn a total of  7.00  from holding Sextant Short Term Bond or generate 1.43% return on investment over 90 days.

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

Sextant Short Term Bond  vs.  Sextant Growth Fund

Sextant Short Term

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sextant Short Term Bond are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Sextant Short-term is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sextant Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sextant Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Sextant Short-term and Sextant Growth

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

The idea behind Sextant Short Term Bond and Sextant Growth 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.

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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.