Correlation Between Balanced Fund and Spectrum Fund

Can any of the company-specific risk be diversified away by investing in both Balanced Fund and Spectrum 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 Spectrum 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 Spectrum Fund Institutional, you can compare the effects of market volatilities on Balanced Fund and Spectrum 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 Spectrum Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Spectrum Fund.

Diversification Opportunities for Balanced Fund and Spectrum Fund

1.0

Correlation Coefficient

Balanced Fund  Spectrum Fund

No risk reduction

The 3 months correlation between Balanced and Spectrum is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Institutional and Spectrum Fund Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectrum Fund Instit 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 Spectrum Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectrum Fund Instit has no effect on the direction of Balanced Fund i.e., Balanced Fund and Spectrum Fund go up and down completely randomly.

Pair Corralation between Balanced Fund and Spectrum Fund

Assuming the 90 days horizon Balanced Fund is expected to generate 1.31 times less return on investment than Spectrum Fund. But when comparing it to its historical volatility, Balanced Fund Institutional is 1.38 times less risky than Spectrum Fund. It trades about 0.33 of its potential returns per unit of risk. Spectrum Fund Institutional is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  1,261  in Spectrum Fund Institutional on April 22, 2025 and sell it today you would earn a total of  178.00  from holding Spectrum Fund Institutional or generate 14.12% 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.  Spectrum Fund Institutional

Balanced Fund Instit

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Balanced Fund Institutional are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. 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.

Spectrum Fund Instit

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Spectrum Fund Institutional are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Spectrum Fund showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Balanced Fund and Spectrum Fund

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

The idea behind Balanced Fund Institutional and Spectrum 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..