Correlation Between Select Fund and Focused International
Can any of the company-specific risk be diversified away by investing in both Select Fund and Focused International 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 Select Fund and Focused International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Select Fund Investor and Focused International Growth, you can compare the effects of market volatilities on Select Fund and Focused International 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 Select Fund with a short position of Focused International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Fund and Focused International.
Diversification Opportunities for Select Fund and Focused International
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Select and Focused is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Select Fund Investor and Focused International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focused International and Select Fund 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 Select Fund Investor are associated (or correlated) with Focused International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focused International has no effect on the direction of Select Fund i.e., Select Fund and Focused International go up and down completely randomly.
Pair Corralation between Select Fund and Focused International
Assuming the 90 days horizon Select Fund Investor is expected to generate 1.3 times more return on investment than Focused International. However, Select Fund is 1.3 times more volatile than Focused International Growth. It trades about 0.04 of its potential returns per unit of risk. Focused International Growth is currently generating about -0.13 per unit of risk. If you would invest 12,053 in Select Fund Investor on September 25, 2024 and sell it today you would earn a total of 312.00 from holding Select Fund Investor or generate 2.59% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Select Fund Investor vs. Focused International Growth
Performance |
Timeline |
Select Fund Investor |
Focused International |
Select Fund and Focused International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Select Fund and Focused International
The main advantage of trading using opposite Select Fund and Focused International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Fund position performs unexpectedly, Focused International 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 Focused International will offset losses from the drop in Focused International's long position.Select Fund vs. Growth Fund Investor | Select Fund vs. Ultra Fund Investor | Select Fund vs. Heritage Fund Investor | Select Fund vs. International Growth Fund |
Focused International vs. Value Fund Investor | Focused International vs. Ultra Fund Investor | Focused International vs. Growth Fund Investor | Focused International vs. Income Growth Fund |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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