Correlation Between Saba Closed and Principal Active

Can any of the company-specific risk be diversified away by investing in both Saba Closed and Principal Active 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 Saba Closed and Principal Active into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Saba Closed End Funds and Principal Active High, you can compare the effects of market volatilities on Saba Closed and Principal Active 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 Saba Closed with a short position of Principal Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saba Closed and Principal Active.

Diversification Opportunities for Saba Closed and Principal Active

0.86

Correlation Coefficient

Saba Closed  Principal Active

Very poor diversification

The 3 months correlation between Saba and Principal is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Saba Closed End Funds and Principal Active High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Active High and Saba Closed 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 Saba Closed End Funds are associated (or correlated) with Principal Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Active High has no effect on the direction of Saba Closed i.e., Saba Closed and Principal Active go up and down completely randomly.

Pair Corralation between Saba Closed and Principal Active

Given the investment horizon of 90 days Saba Closed End Funds is expected to generate 1.69 times more return on investment than Principal Active. However, Saba Closed is 1.69 times more volatile than Principal Active High. It trades about 0.1 of its potential returns per unit of risk. Principal Active High is currently generating about 0.1 per unit of risk. If you would invest  2,155  in Saba Closed End Funds on August 30, 2024 and sell it today you would earn a total of  79.00  from holding Saba Closed End Funds or generate 3.67% return on investment over 90 days.

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

Saba Closed End Funds  vs.  Principal Active High

Saba Closed End

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Saba Closed End Funds are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Saba Closed is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Principal Active High

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Principal Active High are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Principal Active is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Saba Closed and Principal Active

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

The idea behind Saba Closed End Funds and Principal Active High 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..