Correlation Between Moderate Strategy and Leader Short-term

Can any of the company-specific risk be diversified away by investing in both Moderate Strategy and Leader Short-term 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 Moderate Strategy and Leader Short-term into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Moderate Strategy Fund and Leader Short Term Bond, you can compare the effects of market volatilities on Moderate Strategy and Leader Short-term 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 Moderate Strategy with a short position of Leader Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moderate Strategy and Leader Short-term.

Diversification Opportunities for Moderate Strategy and Leader Short-term

0.93

Correlation Coefficient

Moderate Strategy  Leader Short-term

Almost no diversification

The 3 months correlation between Moderate and Leader is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Moderate Strategy Fund and Leader Short Term Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leader Short Term and Moderate Strategy 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 Moderate Strategy Fund are associated (or correlated) with Leader Short-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leader Short Term has no effect on the direction of Moderate Strategy i.e., Moderate Strategy and Leader Short-term go up and down completely randomly.

Pair Corralation between Moderate Strategy and Leader Short-term

Assuming the 90 days horizon Moderate Strategy Fund is expected to generate 1.91 times more return on investment than Leader Short-term. However, Moderate Strategy is 1.91 times more volatile than Leader Short Term Bond. It trades about 0.2 of its potential returns per unit of risk. Leader Short Term Bond is currently generating about 0.34 per unit of risk. If you would invest  914.00  in Moderate Strategy Fund on May 18, 2025 and sell it today you would earn a total of  38.00  from holding Moderate Strategy Fund or generate 4.16% return on investment over 90 days.

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

Moderate Strategy Fund  vs.  Leader Short Term Bond

Moderate Strategy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Moderate Strategy Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Moderate Strategy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Leader Short Term

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Leader Short Term Bond are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Leader Short-term is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Moderate Strategy and Leader Short-term

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

The idea behind Moderate Strategy Fund and Leader Short Term Bond 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.