Correlation Between Core Plus and Partners Value

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

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

Diversification Opportunities for Core Plus and Partners Value

0.07

Correlation Coefficient

Core Plus  Partners Value

Significant diversification

The 3 months correlation between Core and Partners is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Core Plus Income and Partners Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Partners Value and Core Plus 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 Core Plus Income are associated (or correlated) with Partners Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Partners Value has no effect on the direction of Core Plus i.e., Core Plus and Partners Value go up and down completely randomly.

Pair Corralation between Core Plus and Partners Value

Assuming the 90 days horizon Core Plus Income is expected to generate 0.35 times more return on investment than Partners Value. However, Core Plus Income is 2.82 times less risky than Partners Value. It trades about 0.14 of its potential returns per unit of risk. Partners Value Fund is currently generating about 0.0 per unit of risk. If you would invest  942.00  in Core Plus Income on December 26, 2024 and sell it today you would earn a total of  23.00  from holding Core Plus Income or generate 2.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Core Plus Income  vs.  Partners Value Fund

Core Plus Income

Risk-Adjusted Performance

OK

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

Partners Value

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Core Plus and Partners Value

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

The idea behind Core Plus Income and Partners Value 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.