Correlation Between Value Line and Sextant International

Can any of the company-specific risk be diversified away by investing in both Value Line and Sextant 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 Value Line and Sextant International 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 International Fund, you can compare the effects of market volatilities on Value Line and Sextant 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 Value Line with a short position of Sextant International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Value Line and Sextant International.

Diversification Opportunities for Value Line and Sextant International

-0.32

Correlation Coefficient

Value Line  Sextant International

Very good diversification

The 3 months correlation between Value and Sextant is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Value Line Premier and Sextant International Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sextant International 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 International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sextant International has no effect on the direction of Value Line i.e., Value Line and Sextant International go up and down completely randomly.

Pair Corralation between Value Line and Sextant International

Assuming the 90 days horizon Value Line Premier is expected to generate 0.9 times more return on investment than Sextant International. However, Value Line Premier is 1.12 times less risky than Sextant International. It trades about 0.03 of its potential returns per unit of risk. Sextant International Fund is currently generating about -0.03 per unit of risk. If you would invest  3,984  in Value Line Premier on September 14, 2024 and sell it today you would earn a total of  45.00  from holding Value Line Premier or generate 1.13% return on investment over 90 days.

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

Value Line Premier  vs.  Sextant International Fund

Value Line Premier

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Value Line Premier are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Value Line is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sextant International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Value Line and Sextant International

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

The idea behind Value Line Premier and Sextant International 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.