Correlation Between Spectrum Fund and Cabana Target
Can any of the company-specific risk be diversified away by investing in both Spectrum Fund and Cabana Target 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 Cabana Target 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 Cabana Target Drawdown, you can compare the effects of market volatilities on Spectrum Fund and Cabana Target 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 Cabana Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spectrum Fund and Cabana Target.
Diversification Opportunities for Spectrum Fund and Cabana Target
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Spectrum and Cabana is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Spectrum Fund Adviser and Cabana Target Drawdown in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabana Target Drawdown 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 Cabana Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabana Target Drawdown has no effect on the direction of Spectrum Fund i.e., Spectrum Fund and Cabana Target go up and down completely randomly.
Pair Corralation between Spectrum Fund and Cabana Target
Assuming the 90 days horizon Spectrum Fund Adviser is expected to generate 2.38 times more return on investment than Cabana Target. However, Spectrum Fund is 2.38 times more volatile than Cabana Target Drawdown. It trades about 0.02 of its potential returns per unit of risk. Cabana Target Drawdown is currently generating about 0.0 per unit of risk. If you would invest 1,376 in Spectrum Fund Adviser on February 9, 2024 and sell it today you would earn a total of 5.00 from holding Spectrum Fund Adviser or generate 0.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Spectrum Fund Adviser vs. Cabana Target Drawdown
Performance |
Timeline |
Spectrum Fund Adviser |
Cabana Target Drawdown |
Spectrum Fund and Cabana Target Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Spectrum Fund and Cabana Target
The main advantage of trading using opposite Spectrum Fund and Cabana Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spectrum Fund position performs unexpectedly, Cabana Target 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 Cabana Target will offset losses from the drop in Cabana Target's long position.Spectrum Fund vs. Neuberger Berman Long | Spectrum Fund vs. Neuberger Berman Long | Spectrum Fund vs. Aqr Long Short Equity | Spectrum Fund vs. Diamond Hill Long Short |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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