Correlation Between The Tocqueville and Extended Market
Can any of the company-specific risk be diversified away by investing in both The Tocqueville and Extended Market 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 The Tocqueville and Extended Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Tocqueville Fund and Extended Market Index, you can compare the effects of market volatilities on The Tocqueville and Extended Market 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 The Tocqueville with a short position of Extended Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Tocqueville and Extended Market.
Diversification Opportunities for The Tocqueville and Extended Market
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between The and Extended is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding The Tocqueville Fund and Extended Market Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extended Market Index and The Tocqueville 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 The Tocqueville Fund are associated (or correlated) with Extended Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extended Market Index has no effect on the direction of The Tocqueville i.e., The Tocqueville and Extended Market go up and down completely randomly.
Pair Corralation between The Tocqueville and Extended Market
Assuming the 90 days horizon The Tocqueville Fund is expected to generate 0.76 times more return on investment than Extended Market. However, The Tocqueville Fund is 1.31 times less risky than Extended Market. It trades about 0.43 of its potential returns per unit of risk. Extended Market Index is currently generating about 0.28 per unit of risk. If you would invest 4,146 in The Tocqueville Fund on April 19, 2025 and sell it today you would earn a total of 1,012 from holding The Tocqueville Fund or generate 24.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Tocqueville Fund vs. Extended Market Index
Performance |
| Timeline |
| The Tocqueville |
| Extended Market Index |
The Tocqueville and Extended Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Tocqueville and Extended Market
The main advantage of trading using opposite The Tocqueville and Extended Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Tocqueville position performs unexpectedly, Extended Market 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 Extended Market will offset losses from the drop in Extended Market's long position.| The Tocqueville vs. Equity Series Class | The Tocqueville vs. Large Cap Fund | The Tocqueville vs. The Tocqueville International | The Tocqueville vs. Heartland Value Plus |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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