Correlation Between Oak Ridge and Select Fund

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

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

Diversification Opportunities for Oak Ridge and Select Fund

0.98

Correlation Coefficient

Oak Ridge  Select Fund

Almost no diversification

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

Pair Corralation between Oak Ridge and Select Fund

Assuming the 90 days horizon Oak Ridge Small is expected to under-perform the Select Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Oak Ridge Small is 1.22 times less risky than Select Fund. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Select Fund Investor is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  10,960  in Select Fund Investor on January 30, 2025 and sell it today you would lose (1.00) from holding Select Fund Investor or give up 0.01% of portfolio value over 90 days.

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

Oak Ridge Small  vs.  Select Fund Investor

Oak Ridge Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oak Ridge Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Select Fund Investor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Select Fund Investor has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Oak Ridge and Select Fund

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

The idea behind Oak Ridge Small and Select Fund Investor 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.