Correlation Between Spectrum Fund and Exchange Traded

Can any of the company-specific risk be diversified away by investing in both Spectrum Fund and Exchange Traded 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 Exchange Traded 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 Exchange Traded Concepts, you can compare the effects of market volatilities on Spectrum Fund and Exchange Traded 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 Exchange Traded. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spectrum Fund and Exchange Traded.

Diversification Opportunities for Spectrum Fund and Exchange Traded

0.58

Correlation Coefficient

Spectrum Fund  Exchange Traded

Very weak diversification

The 3 months correlation between Spectrum and Exchange is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Spectrum Fund Adviser and Exchange Traded Concepts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Traded Concepts 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 Exchange Traded. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Traded Concepts has no effect on the direction of Spectrum Fund i.e., Spectrum Fund and Exchange Traded go up and down completely randomly.

Pair Corralation between Spectrum Fund and Exchange Traded

Assuming the 90 days horizon Spectrum Fund Adviser is expected to generate 0.13 times more return on investment than Exchange Traded. However, Spectrum Fund Adviser is 7.5 times less risky than Exchange Traded. It trades about 0.05 of its potential returns per unit of risk. Exchange Traded Concepts is currently generating about -0.05 per unit of risk. If you would invest  1,130  in Spectrum Fund Adviser on January 19, 2024 and sell it today you would earn a total of  190.00  from holding Spectrum Fund Adviser or generate 16.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	85.66%
Values	Daily Returns

Spectrum Fund Adviser  vs.  Exchange Traded Concepts

Spectrum Fund Adviser

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Spectrum Fund Adviser are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Spectrum Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Exchange Traded Concepts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exchange Traded Concepts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Exchange Traded is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Spectrum Fund and Exchange Traded

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

The idea behind Spectrum Fund Adviser and Exchange Traded Concepts 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.