Correlation Between 13d Activist and Disciplined Growth

Can any of the company-specific risk be diversified away by investing in both 13d Activist and Disciplined Growth 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 13d Activist and Disciplined Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 13d Activist Fund and The Disciplined Growth, you can compare the effects of market volatilities on 13d Activist and Disciplined Growth 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 13d Activist with a short position of Disciplined Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of 13d Activist and Disciplined Growth.

Diversification Opportunities for 13d Activist and Disciplined Growth

0.72

Correlation Coefficient

13d Activist  Disciplined Growth

Poor diversification

The 3 months correlation between 13d and Disciplined is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding 13d Activist Fund and The Disciplined Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Disciplined Growth and 13d Activist 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 13d Activist Fund are associated (or correlated) with Disciplined Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Disciplined Growth has no effect on the direction of 13d Activist i.e., 13d Activist and Disciplined Growth go up and down completely randomly.

Pair Corralation between 13d Activist and Disciplined Growth

Assuming the 90 days horizon 13d Activist is expected to generate 13.01 times less return on investment than Disciplined Growth. In addition to that, 13d Activist is 1.31 times more volatile than The Disciplined Growth. It trades about 0.01 of its total potential returns per unit of risk. The Disciplined Growth is currently generating about 0.14 per unit of volatility. If you would invest  2,396  in The Disciplined Growth on September 16, 2024 and sell it today you would earn a total of  169.00  from holding The Disciplined Growth or generate 7.05% return on investment over 90 days.

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

13d Activist Fund  vs.  The Disciplined Growth

13d Activist

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 13d Activist Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, 13d Activist is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

The Disciplined Growth

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Disciplined Growth are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Disciplined Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with 13d Activist and Disciplined Growth

The main advantage of trading using opposite 13d Activist and Disciplined Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 13d Activist position performs unexpectedly, Disciplined Growth 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 Disciplined Growth will offset losses from the drop in Disciplined Growth's long position.

The idea behind 13d Activist Fund and The Disciplined Growth 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.