Correlation Between Counterpoint Tactical and Energy Fund

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

By analyzing existing cross correlation between Counterpoint Tactical Municipal and Energy Fund Class, you can compare the effects of market volatilities on Counterpoint Tactical and Energy 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 Counterpoint Tactical with a short position of Energy Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Counterpoint Tactical and Energy Fund.

Diversification Opportunities for Counterpoint Tactical and Energy Fund

0.56

Correlation Coefficient

Counterpoint Tactical  Energy Fund

Very weak diversification

The 3 months correlation between Counterpoint and Energy is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Counterpoint Tactical Municipa and Energy Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Fund Class and Counterpoint Tactical 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 Counterpoint Tactical Municipal are associated (or correlated) with Energy Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Fund Class has no effect on the direction of Counterpoint Tactical i.e., Counterpoint Tactical and Energy Fund go up and down completely randomly.

Pair Corralation between Counterpoint Tactical and Energy Fund

Assuming the 90 days horizon Counterpoint Tactical Municipal is expected to generate 0.2 times more return on investment than Energy Fund. However, Counterpoint Tactical Municipal is 5.01 times less risky than Energy Fund. It trades about 0.01 of its potential returns per unit of risk. Energy Fund Class is currently generating about -0.06 per unit of risk. If you would invest  1,067  in Counterpoint Tactical Municipal on September 29, 2024 and sell it today you would earn a total of  4.00  from holding Counterpoint Tactical Municipal or generate 0.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.21%
Values	Daily Returns

Counterpoint Tactical Municipa  vs.  Energy Fund Class

Counterpoint Tactical

Risk-Adjusted Performance

0 of 100

Very Weak

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

Energy Fund Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energy Fund Class has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Counterpoint Tactical and Energy Fund

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

The idea behind Counterpoint Tactical Municipal and Energy Fund Class 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.