Correlation Between Balanced Fund and Global Centrated

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

By analyzing existing cross correlation between Balanced Fund Investor and Global Centrated Portfolio, you can compare the effects of market volatilities on Balanced Fund and Global Centrated 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 Balanced Fund with a short position of Global Centrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Global Centrated.

Diversification Opportunities for Balanced Fund and Global Centrated

0.78

Correlation Coefficient

Balanced Fund  Global Centrated

Poor diversification

The 3 months correlation between Balanced and Global is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Investor and Global Centrated Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Centrated Por and Balanced Fund 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 Balanced Fund Investor are associated (or correlated) with Global Centrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Centrated Por has no effect on the direction of Balanced Fund i.e., Balanced Fund and Global Centrated go up and down completely randomly.

Pair Corralation between Balanced Fund and Global Centrated

Assuming the 90 days horizon Balanced Fund is expected to generate 1.73 times less return on investment than Global Centrated. But when comparing it to its historical volatility, Balanced Fund Investor is 1.84 times less risky than Global Centrated. It trades about 0.11 of its potential returns per unit of risk. Global Centrated Portfolio is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,421  in Global Centrated Portfolio on September 13, 2024 and sell it today you would earn a total of  875.00  from holding Global Centrated Portfolio or generate 61.58% return on investment over 90 days.

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

Balanced Fund Investor  vs.  Global Centrated Portfolio

Balanced Fund Investor

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Balanced Fund Investor are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Balanced Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Global Centrated Por

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Centrated Portfolio are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Global Centrated is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Balanced Fund and Global Centrated

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

The idea behind Balanced Fund Investor and Global Centrated Portfolio 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.