Correlation Between Select Fund and Large Company

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

By analyzing existing cross correlation between Select Fund I and Large Pany Value, you can compare the effects of market volatilities on Select Fund and Large Company 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 Large Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Fund and Large Company.

Diversification Opportunities for Select Fund and Large Company

-0.36

Correlation Coefficient

Select Fund  Large Company

Very good diversification

The 3 months correlation between Select and Large is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Select Fund I and Large Pany Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Pany Value 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 I are associated (or correlated) with Large Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Pany Value has no effect on the direction of Select Fund i.e., Select Fund and Large Company go up and down completely randomly.

Pair Corralation between Select Fund and Large Company

Assuming the 90 days horizon Select Fund I is expected to under-perform the Large Company. In addition to that, Select Fund is 1.99 times more volatile than Large Pany Value. It trades about -0.13 of its total potential returns per unit of risk. Large Pany Value is currently generating about 0.13 per unit of volatility. If you would invest  1,002  in Large Pany Value on December 29, 2024 and sell it today you would earn a total of  55.00  from holding Large Pany Value or generate 5.49% return on investment over 90 days.

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

Select Fund I  vs.  Large Pany Value

Select Fund I

Risk-Adjusted Performance

Very Weak

Over the last 90 days Select Fund I 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.

Large Pany Value

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Large Pany Value are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Large Company is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Select Fund and Large Company

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

The idea behind Select Fund I and Large Pany Value 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.