Correlation Between Tax-free Conservative and Elfun Diversified
Can any of the company-specific risk be diversified away by investing in both Tax-free Conservative and Elfun Diversified 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 Tax-free Conservative and Elfun Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tax Free Conservative Income and Elfun Diversified Fund, you can compare the effects of market volatilities on Tax-free Conservative and Elfun Diversified 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 Tax-free Conservative with a short position of Elfun Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tax-free Conservative and Elfun Diversified.
Diversification Opportunities for Tax-free Conservative and Elfun Diversified
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Tax-free and Elfun is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Tax Free Conservative Income and Elfun Diversified Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elfun Diversified and Tax-free Conservative 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 Tax Free Conservative Income are associated (or correlated) with Elfun Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elfun Diversified has no effect on the direction of Tax-free Conservative i.e., Tax-free Conservative and Elfun Diversified go up and down completely randomly.
Pair Corralation between Tax-free Conservative and Elfun Diversified
Assuming the 90 days horizon Tax-free Conservative is expected to generate 1.94 times less return on investment than Elfun Diversified. But when comparing it to its historical volatility, Tax Free Conservative Income is 9.44 times less risky than Elfun Diversified. It trades about 0.17 of its potential returns per unit of risk. Elfun Diversified Fund is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,035 in Elfun Diversified Fund on December 27, 2024 and sell it today you would earn a total of 22.00 from holding Elfun Diversified Fund or generate 1.08% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Tax Free Conservative Income vs. Elfun Diversified Fund
Performance |
Timeline |
Tax Free Conservative |
Elfun Diversified |
Tax-free Conservative and Elfun Diversified Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tax-free Conservative and Elfun Diversified
The main advantage of trading using opposite Tax-free Conservative and Elfun Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tax-free Conservative position performs unexpectedly, Elfun Diversified 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 Elfun Diversified will offset losses from the drop in Elfun Diversified's long position.Tax-free Conservative vs. Siit Emerging Markets | Tax-free Conservative vs. Investec Emerging Markets | Tax-free Conservative vs. Pnc Emerging Markets | Tax-free Conservative vs. Franklin Emerging Market |
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Check out your portfolio center.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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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