Correlation Between Generation Capital and More Provident

Can any of the company-specific risk be diversified away by investing in both Generation Capital and More Provident 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 Generation Capital and More Provident into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Generation Capital and More Provident Funds, you can compare the effects of market volatilities on Generation Capital and More Provident 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 Generation Capital with a short position of More Provident. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generation Capital and More Provident.

Diversification Opportunities for Generation Capital and More Provident

0.88

Correlation Coefficient

Generation Capital  More Provident

Very poor diversification

The 3 months correlation between Generation and More is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Generation Capital and More Provident Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on More Provident Funds and Generation Capital 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 Generation Capital are associated (or correlated) with More Provident. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of More Provident Funds has no effect on the direction of Generation Capital i.e., Generation Capital and More Provident go up and down completely randomly.

Pair Corralation between Generation Capital and More Provident

Assuming the 90 days trading horizon Generation Capital is expected to generate 2.49 times less return on investment than More Provident. In addition to that, Generation Capital is 1.08 times more volatile than More Provident Funds. It trades about 0.19 of its total potential returns per unit of risk. More Provident Funds is currently generating about 0.5 per unit of volatility. If you would invest  43,904  in More Provident Funds on September 16, 2024 and sell it today you would earn a total of  29,276  from holding More Provident Funds or generate 66.68% return on investment over 90 days.

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

Generation Capital  vs.  More Provident Funds

Generation Capital

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Generation Capital are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Generation Capital sustained solid returns over the last few months and may actually be approaching a breakup point.

More Provident Funds

Risk-Adjusted Performance

39 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in More Provident Funds are ranked lower than 39 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, More Provident sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Generation Capital and More Provident

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

The idea behind Generation Capital and More Provident Funds 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.