Correlation Between Short Duration and 13d Activist

Can any of the company-specific risk be diversified away by investing in both Short Duration and 13d Activist 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 Short Duration and 13d Activist into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Short Duration Inflation and 13d Activist Fund, you can compare the effects of market volatilities on Short Duration and 13d Activist 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 Short Duration with a short position of 13d Activist. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Duration and 13d Activist.

Diversification Opportunities for Short Duration and 13d Activist

0.63

Correlation Coefficient

Short Duration  13d Activist

Poor diversification

The 3 months correlation between Short and 13d is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Short Duration Inflation and 13d Activist Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 13d Activist and Short Duration 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 Short Duration Inflation are associated (or correlated) with 13d Activist. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 13d Activist has no effect on the direction of Short Duration i.e., Short Duration and 13d Activist go up and down completely randomly.

Pair Corralation between Short Duration and 13d Activist

Assuming the 90 days horizon Short Duration is expected to generate 33.78 times less return on investment than 13d Activist. But when comparing it to its historical volatility, Short Duration Inflation is 5.11 times less risky than 13d Activist. It trades about 0.03 of its potential returns per unit of risk. 13d Activist Fund is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1,850  in 13d Activist Fund on April 29, 2025 and sell it today you would earn a total of  272.00  from holding 13d Activist Fund or generate 14.7% return on investment over 90 days.

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

Short Duration Inflation  vs.  13d Activist Fund

Short Duration Inflation

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Short Duration Inflation are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Short Duration is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

13d Activist

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in 13d Activist Fund are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, 13d Activist showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Short Duration and 13d Activist

The main advantage of trading using opposite Short Duration and 13d Activist positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Duration position performs unexpectedly, 13d Activist 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 13d Activist will offset losses from the drop in 13d Activist's long position.

The idea behind Short Duration Inflation and 13d Activist Fund 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.