Correlation Between Financial Industries and Qs Defensive
Can any of the company-specific risk be diversified away by investing in both Financial Industries and Qs Defensive 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 Financial Industries and Qs Defensive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial Industries Fund and Qs Defensive Growth, you can compare the effects of market volatilities on Financial Industries and Qs Defensive 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 Financial Industries with a short position of Qs Defensive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Industries and Qs Defensive.
Diversification Opportunities for Financial Industries and Qs Defensive
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Financial and LMLRX is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Financial Industries Fund and Qs Defensive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qs Defensive Growth and Financial Industries 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 Financial Industries Fund are associated (or correlated) with Qs Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qs Defensive Growth has no effect on the direction of Financial Industries i.e., Financial Industries and Qs Defensive go up and down completely randomly.
Pair Corralation between Financial Industries and Qs Defensive
Assuming the 90 days horizon Financial Industries Fund is expected to generate 2.63 times more return on investment than Qs Defensive. However, Financial Industries is 2.63 times more volatile than Qs Defensive Growth. It trades about 0.26 of its potential returns per unit of risk. Qs Defensive Growth is currently generating about 0.35 per unit of risk. If you would invest 1,647 in Financial Industries Fund on April 21, 2025 and sell it today you would earn a total of 274.00 from holding Financial Industries Fund or generate 16.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial Industries Fund vs. Qs Defensive Growth
Performance |
| Timeline |
| Financial Industries |
| Qs Defensive Growth |
Financial Industries and Qs Defensive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial Industries and Qs Defensive
The main advantage of trading using opposite Financial Industries and Qs Defensive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Industries position performs unexpectedly, Qs Defensive 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 Qs Defensive will offset losses from the drop in Qs Defensive's long position.| Financial Industries vs. Janus Global Technology | Financial Industries vs. Hennessy Technology Fund | Financial Industries vs. Icon Information Technology | Financial Industries vs. Allianzgi Technology Fund |
| Qs Defensive vs. Transamerica Emerging Markets | Qs Defensive vs. Oberweis Emerging Growth | Qs Defensive vs. Fidelity Series Emerging | Qs Defensive vs. Nasdaq 100 2x Strategy |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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