Correlation Between North Star and Infrastructure Fund

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

By analyzing existing cross correlation between North Star Micro and Infrastructure Fund Retail, you can compare the effects of market volatilities on North Star and Infrastructure 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 North Star with a short position of Infrastructure Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of North Star and Infrastructure Fund.

Diversification Opportunities for North Star and Infrastructure Fund

0.59

Correlation Coefficient

North Star  Infrastructure Fund

Very weak diversification

The 3 months correlation between North and Infrastructure is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding North Star Micro and Infrastructure Fund Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infrastructure Fund and North Star 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 North Star Micro are associated (or correlated) with Infrastructure Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infrastructure Fund has no effect on the direction of North Star i.e., North Star and Infrastructure Fund go up and down completely randomly.

Pair Corralation between North Star and Infrastructure Fund

Assuming the 90 days horizon North Star Micro is expected to generate 4.0 times more return on investment than Infrastructure Fund. However, North Star is 4.0 times more volatile than Infrastructure Fund Retail. It trades about 0.02 of its potential returns per unit of risk. Infrastructure Fund Retail is currently generating about -0.04 per unit of risk. If you would invest  4,287  in North Star Micro on September 19, 2024 and sell it today you would earn a total of  46.00  from holding North Star Micro or generate 1.07% return on investment over 90 days.

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

North Star Micro  vs.  Infrastructure Fund Retail

North Star Micro

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in North Star Micro are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, North Star is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Infrastructure Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infrastructure Fund Retail has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Infrastructure 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 North Star and Infrastructure Fund

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

The idea behind North Star Micro and Infrastructure Fund Retail 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.