Correlation Between IShares SP and Princeton Fund

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Can any of the company-specific risk be diversified away by investing in both IShares SP and Princeton 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 IShares SP and Princeton Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares SP 500 and Princeton Fund Advisors, you can compare the effects of market volatilities on IShares SP and Princeton 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 IShares SP with a short position of Princeton Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and Princeton Fund.

Diversification Opportunities for IShares SP and Princeton Fund

ISharesPrincetonDiversified AwayISharesPrincetonDiversified Away100%
0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between IShares and Princeton is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP 500 and Princeton Fund Advisors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Princeton Fund Advisors and IShares SP 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 iShares SP 500 are associated (or correlated) with Princeton Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Princeton Fund Advisors has no effect on the direction of IShares SP i.e., IShares SP and Princeton Fund go up and down completely randomly.

Pair Corralation between IShares SP and Princeton Fund

If you would invest  9,563  in iShares SP 500 on September 29, 2024 and sell it today you would earn a total of  950.00  from holding iShares SP 500 or generate 9.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy1.59%
ValuesDaily Returns

iShares SP 500  vs.  Princeton Fund Advisors

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 0510
JavaScript chart by amCharts 3.21.15IVW AILG
       Timeline  
iShares SP 500 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in iShares SP 500 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, IShares SP may actually be approaching a critical reversion point that can send shares even higher in January 2025.
JavaScript chart by amCharts 3.21.15NovDecDec949698100102104106
Princeton Fund Advisors 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Princeton Fund Advisors has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Princeton Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

IShares SP and Princeton Fund Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.01-2.26-1.5-0.740.00.791.612.423.244.05 0.10.20.30.4
JavaScript chart by amCharts 3.21.15IVW AILG
       Returns  

Pair Trading with IShares SP and Princeton Fund

The main advantage of trading using opposite IShares SP and Princeton Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SP position performs unexpectedly, Princeton 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 Princeton Fund will offset losses from the drop in Princeton Fund's long position.
The idea behind iShares SP 500 and Princeton Fund Advisors 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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