Correlation Between Vident Core and Build Funds

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

Diversification Opportunities for Vident Core and Build Funds

0.61
  Correlation Coefficient

Poor diversification

The 3 months correlation between Vident and Build is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Vident Core US and Build Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Build Funds Trust and Vident Core 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 Vident Core US are associated (or correlated) with Build Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Build Funds Trust has no effect on the direction of Vident Core i.e., Vident Core and Build Funds go up and down completely randomly.

Pair Corralation between Vident Core and Build Funds

Given the investment horizon of 90 days Vident Core US is expected to under-perform the Build Funds. In addition to that, Vident Core is 1.36 times more volatile than Build Funds Trust. It trades about -0.08 of its total potential returns per unit of risk. Build Funds Trust is currently generating about -0.04 per unit of volatility. If you would invest  2,291  in Build Funds Trust on November 24, 2023 and sell it today you would lose (7.00) from holding Build Funds Trust or give up 0.31% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Vident Core US  vs.  Build Funds Trust

 Performance 
       Timeline  
Vident Core US 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Vident Core US are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Vident Core is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
Build Funds Trust 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Build Funds Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, Build Funds is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Vident Core and Build Funds Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vident Core and Build Funds

The main advantage of trading using opposite Vident Core and Build Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vident Core position performs unexpectedly, Build Funds 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 Build Funds will offset losses from the drop in Build Funds' long position.
The idea behind Vident Core US and Build Funds Trust 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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