Correlation Between Value Line and Sextant Growth

Can any of the company-specific risk be diversified away by investing in both Value Line and Sextant Growth 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 Value Line and Sextant Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Value Line and Sextant Growth

0.65

Correlation Coefficient

Value Line  Sextant Growth

Poor diversification

The 3 months correlation between Value and Sextant is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Value Line Premier and Sextant Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sextant Growth and Value Line 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 Value Line Premier are associated (or correlated) with Sextant Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sextant Growth has no effect on the direction of Value Line i.e., Value Line and Sextant Growth go up and down completely randomly.

Pair Corralation between Value Line and Sextant Growth

Assuming the 90 days horizon Value Line Premier is expected to under-perform the Sextant Growth. In addition to that, Value Line is 1.04 times more volatile than Sextant Growth Fund. It trades about 0.0 of its total potential returns per unit of risk. Sextant Growth Fund is currently generating about 0.04 per unit of volatility. If you would invest  4,876  in Sextant Growth Fund on December 4, 2024 and sell it today you would earn a total of  478.00  from holding Sextant Growth Fund or generate 9.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.59%
Values	Daily Returns

Value Line Premier  vs.  Sextant Growth Fund

Value Line Premier

Risk-Adjusted Performance

Very Weak

Over the last 90 days Value Line Premier has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Sextant Growth

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Value Line and Sextant Growth

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

The idea behind Value Line Premier and Sextant Growth Fund 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.