Correlation Between Vident Core and Build Funds

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 Bond 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

-0.1

Correlation Coefficient

Vident Core  Build Funds

Good diversification

The 3 months correlation between Vident and Build is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Vident Core Bond 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 Bond 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 is expected to generate 65.83 times less return on investment than Build Funds. But when comparing it to its historical volatility, Vident Core Bond is 2.56 times less risky than Build Funds. It trades about 0.0 of its potential returns per unit of risk. Build Funds Trust is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,327  in Build Funds Trust on August 10, 2024 and sell it today you would earn a total of  116.00  from holding Build Funds Trust or generate 4.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Vident Core Bond  vs.  Build Funds Trust

Vident Core Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vident Core Bond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Vident Core is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Build Funds Trust

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Build Funds Trust are ranked lower than 8 (%) 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.

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 Bond 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.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.