Correlation Between A2Z Smart and Transportation Fund

Can any of the company-specific risk be diversified away by investing in both A2Z Smart and Transportation Fund 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 A2Z Smart and Transportation Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between A2Z Smart Technologies and Transportation Fund Class, you can compare the effects of market volatilities on A2Z Smart and Transportation Fund 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 A2Z Smart with a short position of Transportation Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of A2Z Smart and Transportation Fund.

Diversification Opportunities for A2Z Smart and Transportation Fund

0.83

Correlation Coefficient

A2Z Smart  Transportation Fund

Very poor diversification

The 3 months correlation between A2Z and Transportation is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding A2Z Smart Technologies and Transportation Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportation Fund Class and A2Z Smart 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 A2Z Smart Technologies are associated (or correlated) with Transportation Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportation Fund Class has no effect on the direction of A2Z Smart i.e., A2Z Smart and Transportation Fund go up and down completely randomly.

Pair Corralation between A2Z Smart and Transportation Fund

Allowing for the 90-day total investment horizon A2Z Smart Technologies is expected to generate 5.88 times more return on investment than Transportation Fund. However, A2Z Smart is 5.88 times more volatile than Transportation Fund Class. It trades about 0.29 of its potential returns per unit of risk. Transportation Fund Class is currently generating about 0.08 per unit of risk. If you would invest  215.00  in A2Z Smart Technologies on September 26, 2024 and sell it today you would earn a total of  494.00  from holding A2Z Smart Technologies or generate 229.77% return on investment over 90 days.

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

A2Z Smart Technologies  vs.  Transportation Fund Class

A2Z Smart Technologies

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in A2Z Smart Technologies are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, A2Z Smart showed solid returns over the last few months and may actually be approaching a breakup point.

Transportation Fund Class

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Transportation Fund Class are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Transportation Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with A2Z Smart and Transportation Fund

The main advantage of trading using opposite A2Z Smart and Transportation Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A2Z Smart position performs unexpectedly, Transportation Fund 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 Transportation Fund will offset losses from the drop in Transportation Fund's long position.

The idea behind A2Z Smart Technologies and Transportation Fund Class 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.