Correlation Between Balanced Fund and Infrastructure Fund

Can any of the company-specific risk be diversified away by investing in both Balanced Fund and Infrastructure Fund 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 Balanced Fund and Infrastructure Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Balanced Fund Institutional and Infrastructure Fund Institutional, you can compare the effects of market volatilities on Balanced Fund and Infrastructure Fund 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 Balanced Fund with a short position of Infrastructure Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Infrastructure Fund.

Diversification Opportunities for Balanced Fund and Infrastructure Fund

0.98

Correlation Coefficient

Balanced Fund  Infrastructure Fund

Almost no diversification

The 3 months correlation between Balanced and Infrastructure is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Institutional and Infrastructure Fund Institutio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infrastructure Fund and Balanced Fund 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 Balanced Fund Institutional are associated (or correlated) with Infrastructure Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infrastructure Fund has no effect on the direction of Balanced Fund i.e., Balanced Fund and Infrastructure Fund go up and down completely randomly.

Pair Corralation between Balanced Fund and Infrastructure Fund

Assuming the 90 days horizon Balanced Fund Institutional is expected to generate 1.74 times more return on investment than Infrastructure Fund. However, Balanced Fund is 1.74 times more volatile than Infrastructure Fund Institutional. It trades about 0.28 of its potential returns per unit of risk. Infrastructure Fund Institutional is currently generating about 0.24 per unit of risk. If you would invest  1,217  in Balanced Fund Institutional on April 25, 2025 and sell it today you would earn a total of  103.00  from holding Balanced Fund Institutional or generate 8.46% return on investment over 90 days.

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

Balanced Fund Institutional  vs.  Infrastructure Fund Institutio

Balanced Fund Instit

Risk-Adjusted Performance

Solid

Over the last 90 days Balanced Fund Institutional has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak forward indicators, Balanced Fund may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Infrastructure Fund

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Infrastructure Fund Institutional are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Infrastructure Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Balanced Fund and Infrastructure Fund

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

The idea behind Balanced Fund Institutional and Infrastructure Fund Institutional 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.