Correlation Between Financial Investors and SWP Growth

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

By analyzing existing cross correlation between Financial Investors Trust and SWP Growth Income, you can compare the effects of market volatilities on Financial Investors and SWP Growth 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 Investors with a short position of SWP Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Investors and SWP Growth.

Diversification Opportunities for Financial Investors and SWP Growth

-0.23

Correlation Coefficient

Financial Investors  SWP Growth

Very good diversification

The 3 months correlation between Financial and SWP is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Financial Investors Trust and SWP Growth Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWP Growth Income and Financial Investors 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 Investors Trust are associated (or correlated) with SWP Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWP Growth Income has no effect on the direction of Financial Investors i.e., Financial Investors and SWP Growth go up and down completely randomly.

Pair Corralation between Financial Investors and SWP Growth

Assuming the 90 days horizon Financial Investors is expected to generate 2.76 times less return on investment than SWP Growth. In addition to that, Financial Investors is 1.69 times more volatile than SWP Growth Income. It trades about 0.15 of its total potential returns per unit of risk. SWP Growth Income is currently generating about 0.68 per unit of volatility. If you would invest  2,254  in SWP Growth Income on February 17, 2025 and sell it today you would earn a total of  252.00  from holding SWP Growth Income or generate 11.18% return on investment over 90 days.

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

Financial Investors Trust  vs.  SWP Growth Income

Financial Investors Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Financial Investors Trust are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Financial Investors may actually be approaching a critical reversion point that can send shares even higher in June 2025.

SWP Growth Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days SWP Growth Income has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, SWP Growth is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Financial Investors and SWP Growth

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

The idea behind Financial Investors Trust and SWP Growth Income 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .