Correlation Between 1nvest High and Ashburton Balanced

Can any of the company-specific risk be diversified away by investing in both 1nvest High and Ashburton Balanced 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 1nvest High and Ashburton Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 1nvest High Equity and Ashburton Balanced, you can compare the effects of market volatilities on 1nvest High and Ashburton Balanced 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 1nvest High with a short position of Ashburton Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1nvest High and Ashburton Balanced.

Diversification Opportunities for 1nvest High and Ashburton Balanced

0.95

Correlation Coefficient

1nvest High  Ashburton Balanced

Almost no diversification

The 3 months correlation between 1nvest and Ashburton is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding 1nvest High Equity and Ashburton Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashburton Balanced and 1nvest High 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 1nvest High Equity are associated (or correlated) with Ashburton Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashburton Balanced has no effect on the direction of 1nvest High i.e., 1nvest High and Ashburton Balanced go up and down completely randomly.

Pair Corralation between 1nvest High and Ashburton Balanced

Assuming the 90 days trading horizon 1nvest High Equity is expected to generate 1.09 times more return on investment than Ashburton Balanced. However, 1nvest High is 1.09 times more volatile than Ashburton Balanced. It trades about 0.2 of its potential returns per unit of risk. Ashburton Balanced is currently generating about 0.21 per unit of risk. If you would invest  135.00  in 1nvest High Equity on September 5, 2024 and sell it today you would earn a total of  8.00  from holding 1nvest High Equity or generate 5.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

1nvest High Equity  vs.  Ashburton Balanced

1nvest High Equity

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 1nvest High Equity are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, 1nvest High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ashburton Balanced

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ashburton Balanced are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ashburton Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with 1nvest High and Ashburton Balanced

The main advantage of trading using opposite 1nvest High and Ashburton Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1nvest High position performs unexpectedly, Ashburton Balanced 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 Ashburton Balanced will offset losses from the drop in Ashburton Balanced's long position.

The idea behind 1nvest High Equity and Ashburton Balanced 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.