Correlation Between Sextant Short-term and Value Line

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

Diversification Opportunities for Sextant Short-term and Value Line

-0.25

Correlation Coefficient

Sextant Short-term  Value Line

Very good diversification

The 3 months correlation between Sextant and Value is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Sextant Short Term Bond 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 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 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 Short-term i.e., Sextant Short-term and Value Line go up and down completely randomly.

Pair Corralation between Sextant Short-term and Value Line

Assuming the 90 days horizon Sextant Short Term Bond is expected to generate 0.16 times more return on investment than Value Line. However, Sextant Short Term Bond is 6.39 times less risky than Value Line. It trades about 0.21 of its potential returns per unit of risk. Value Line Premier is currently generating about -0.03 per unit of risk. If you would invest  489.00  in Sextant Short Term Bond on December 23, 2024 and sell it today you would earn a total of  8.00  from holding Sextant Short Term Bond or generate 1.64% return on investment over 90 days.

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

Sextant Short Term Bond  vs.  Value Line Premier

Sextant Short Term

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sextant Short Term Bond are ranked lower than 16 (%) 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.

Value Line Premier

Risk-Adjusted Performance

Very Weak

Over the last 90 days Value Line Premier has generated negative risk-adjusted returns adding no value to fund investors. 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 Short-term and Value Line

The main advantage of trading using opposite Sextant Short-term and Value Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sextant Short-term 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 Short Term Bond 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.