Correlation Between Short-term Government and Oakhurst Fixed

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

By analyzing existing cross correlation between Short Term Government Fund and Oakhurst Fixed Income, you can compare the effects of market volatilities on Short-term Government and Oakhurst Fixed 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 Short-term Government with a short position of Oakhurst Fixed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short-term Government and Oakhurst Fixed.

Diversification Opportunities for Short-term Government and Oakhurst Fixed

0.05

Correlation Coefficient

Short-term Government  Oakhurst Fixed

Significant diversification

The 3 months correlation between Short-term and Oakhurst is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Short Term Government Fund and Oakhurst Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakhurst Fixed Income and Short-term Government 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 Short Term Government Fund are associated (or correlated) with Oakhurst Fixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakhurst Fixed Income has no effect on the direction of Short-term Government i.e., Short-term Government and Oakhurst Fixed go up and down completely randomly.

Pair Corralation between Short-term Government and Oakhurst Fixed

Assuming the 90 days horizon Short Term Government Fund is expected to generate 0.32 times more return on investment than Oakhurst Fixed. However, Short Term Government Fund is 3.16 times less risky than Oakhurst Fixed. It trades about -0.04 of its potential returns per unit of risk. Oakhurst Fixed Income is currently generating about -0.1 per unit of risk. If you would invest  908.00  in Short Term Government Fund on October 5, 2024 and sell it today you would lose (2.00) from holding Short Term Government Fund or give up 0.22% of portfolio value over 90 days.

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

Short Term Government Fund  vs.  Oakhurst Fixed Income

Short Term Government

Risk-Adjusted Performance

0 of 100

Very Weak

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

Oakhurst Fixed Income

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Short-term Government and Oakhurst Fixed

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

The idea behind Short Term Government Fund and Oakhurst Fixed Income 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.