Correlation Between Spectrum Fund and Archer Balanced

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

Diversification Opportunities for Spectrum Fund and Archer Balanced

0.99
  Correlation Coefficient

No risk reduction

The 3 months correlation between Spectrum and Archer is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding SPECTRUM FUND ADVISER and ARCHER BALANCED FUND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Balanced Fund and Spectrum 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 Spectrum Fund Adviser are associated (or correlated) with Archer Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Balanced Fund has no effect on the direction of Spectrum Fund i.e., Spectrum Fund and Archer Balanced go up and down completely randomly.

Pair Corralation between Spectrum Fund and Archer Balanced

Assuming the 90 days horizon Spectrum Fund Adviser is expected to generate 1.62 times more return on investment than Archer Balanced. However, Spectrum Fund is 1.62 times more volatile than Archer Balanced Fund. It trades about 0.22 of its potential returns per unit of risk. Archer Balanced Fund is currently generating about 0.23 per unit of risk. If you would invest  1,293  in Spectrum Fund Adviser on December 29, 2023 and sell it today you would earn a total of  92.00  from holding Spectrum Fund Adviser or generate 7.12% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

SPECTRUM FUND ADVISER  vs.  ARCHER BALANCED FUND

 Performance 
       Timeline  
Spectrum Fund Adviser 

Risk-Adjusted Performance

15 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Spectrum Fund Adviser are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Spectrum Fund may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Archer Balanced Fund 

Risk-Adjusted Performance

16 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Archer Balanced Fund are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Archer Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Spectrum Fund and Archer Balanced Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Spectrum Fund and Archer Balanced

The main advantage of trading using opposite Spectrum Fund and Archer Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spectrum Fund position performs unexpectedly, Archer Balanced 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 Archer Balanced will offset losses from the drop in Archer Balanced's long position.
The idea behind Spectrum Fund Adviser and Archer Balanced Fund 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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