Correlation Between Equity Growth and Kopernik International

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

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

Diversification Opportunities for Equity Growth and Kopernik International

-0.62

Correlation Coefficient

Equity Growth  Kopernik International

Excellent diversification

The 3 months correlation between Equity and Kopernik is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Equity Growth Fund and Kopernik International Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kopernik International and Equity Growth 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 Equity Growth Fund are associated (or correlated) with Kopernik International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kopernik International has no effect on the direction of Equity Growth i.e., Equity Growth and Kopernik International go up and down completely randomly.

Pair Corralation between Equity Growth and Kopernik International

Assuming the 90 days horizon Equity Growth Fund is expected to generate 1.14 times more return on investment than Kopernik International. However, Equity Growth is 1.14 times more volatile than Kopernik International Fund. It trades about 0.29 of its potential returns per unit of risk. Kopernik International Fund is currently generating about -0.24 per unit of risk. If you would invest  3,366  in Equity Growth Fund on September 17, 2024 and sell it today you would earn a total of  102.00  from holding Equity Growth Fund or generate 3.03% return on investment over 90 days.

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

Equity Growth Fund  vs.  Kopernik International Fund

Equity Growth

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Equity Growth Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Equity Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kopernik International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kopernik International Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Kopernik 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 Equity Growth and Kopernik International

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

The idea behind Equity Growth Fund and Kopernik 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.