Correlation Between Heritage Fund and Focused Dynamic

Can any of the company-specific risk be diversified away by investing in both Heritage Fund and Focused Dynamic 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 Heritage Fund and Focused Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Heritage Fund Investor and Focused Dynamic Growth, you can compare the effects of market volatilities on Heritage Fund and Focused Dynamic 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 Heritage Fund with a short position of Focused Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heritage Fund and Focused Dynamic.

Diversification Opportunities for Heritage Fund and Focused Dynamic

0.06

Correlation Coefficient

Heritage Fund  Focused Dynamic

Significant diversification

The 3 months correlation between Heritage and Focused is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Heritage Fund Investor and Focused Dynamic Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focused Dynamic Growth and Heritage 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 Heritage Fund Investor are associated (or correlated) with Focused Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focused Dynamic Growth has no effect on the direction of Heritage Fund i.e., Heritage Fund and Focused Dynamic go up and down completely randomly.

Pair Corralation between Heritage Fund and Focused Dynamic

Assuming the 90 days horizon Heritage Fund is expected to generate 2.54 times less return on investment than Focused Dynamic. In addition to that, Heritage Fund is 1.01 times more volatile than Focused Dynamic Growth. It trades about 0.04 of its total potential returns per unit of risk. Focused Dynamic Growth is currently generating about 0.1 per unit of volatility. If you would invest  3,884  in Focused Dynamic Growth on October 12, 2024 and sell it today you would earn a total of  3,155  from holding Focused Dynamic Growth or generate 81.23% return on investment over 90 days.

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

Heritage Fund Investor  vs.  Focused Dynamic Growth

Heritage Fund Investor

Risk-Adjusted Performance

0 of 100

Very Weak

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

Focused Dynamic Growth

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Focused Dynamic Growth are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Focused Dynamic may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Heritage Fund and Focused Dynamic

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

The idea behind Heritage Fund Investor and Focused Dynamic Growth 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.