Correlation Between Value Line and Sextant Growth
Can any of the company-specific risk be diversified away by investing in both Value Line and Sextant Growth 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 Value Line and Sextant Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Value Line Premier and Sextant Growth Fund, you can compare the effects of market volatilities on Value Line and Sextant Growth 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 Value Line with a short position of Sextant Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Value Line and Sextant Growth.
Diversification Opportunities for Value Line and Sextant Growth
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Value and Sextant is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Value Line Premier and Sextant Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sextant Growth and Value Line 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 Value Line Premier are associated (or correlated) with Sextant Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sextant Growth has no effect on the direction of Value Line i.e., Value Line and Sextant Growth go up and down completely randomly.
Pair Corralation between Value Line and Sextant Growth
Assuming the 90 days horizon Value Line is expected to generate 1.81 times less return on investment than Sextant Growth. But when comparing it to its historical volatility, Value Line Premier is 1.18 times less risky than Sextant Growth. It trades about 0.16 of its potential returns per unit of risk. Sextant Growth Fund is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 5,086 in Sextant Growth Fund on September 6, 2024 and sell it today you would earn a total of 720.00 from holding Sextant Growth Fund or generate 14.16% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Value Line Premier vs. Sextant Growth Fund
Performance |
Timeline |
Value Line Premier |
Sextant Growth |
Value Line and Sextant Growth Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Value Line and Sextant Growth
The main advantage of trading using opposite Value Line and Sextant Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Value Line position performs unexpectedly, Sextant Growth 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 Sextant Growth will offset losses from the drop in Sextant Growth's long position.Value Line vs. Value Line Larger | Value Line vs. Value Line Small | Value Line vs. Value Line Mid | Value Line vs. Value Line Income |
Sextant Growth vs. Sextant International Fund | Sextant Growth vs. Sextant Bond Income | Sextant Growth vs. Teton Westwood Equity | Sextant Growth vs. Value Line Premier |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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