Correlation Between Basic Materials and Electronics Fund
Can any of the company-specific risk be diversified away by investing in both Basic Materials and Electronics 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 Basic Materials and Electronics Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Basic Materials Fund and Electronics Fund Investor, you can compare the effects of market volatilities on Basic Materials and Electronics 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 Basic Materials with a short position of Electronics Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basic Materials and Electronics Fund.
Diversification Opportunities for Basic Materials and Electronics Fund
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Basic and Electronics is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Basic Materials Fund and Electronics Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronics Fund Investor and Basic Materials 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 Basic Materials Fund are associated (or correlated) with Electronics Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronics Fund Investor has no effect on the direction of Basic Materials i.e., Basic Materials and Electronics Fund go up and down completely randomly.
Pair Corralation between Basic Materials and Electronics Fund
Assuming the 90 days horizon Basic Materials is expected to generate 2.58 times less return on investment than Electronics Fund. But when comparing it to its historical volatility, Basic Materials Fund is 1.93 times less risky than Electronics Fund. It trades about 0.23 of its potential returns per unit of risk. Electronics Fund Investor is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 34,994 in Electronics Fund Investor on April 25, 2025 and sell it today you would earn a total of 12,335 from holding Electronics Fund Investor or generate 35.25% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Basic Materials Fund vs. Electronics Fund Investor
Performance |
Timeline |
Basic Materials |
Electronics Fund Investor |
Basic Materials and Electronics Fund Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Basic Materials and Electronics Fund
The main advantage of trading using opposite Basic Materials and Electronics Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basic Materials position performs unexpectedly, Electronics 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 Electronics Fund will offset losses from the drop in Electronics Fund's long position.Basic Materials vs. Fuller Thaler Behavioral | Basic Materials vs. Catholic Responsible Investments | Basic Materials vs. Ab Discovery Value | Basic Materials vs. T Rowe Price |
Electronics Fund vs. Technology Fund Investor | Electronics Fund vs. Financial Services Fund | Electronics Fund vs. Telecommunications Fund Investor | Electronics Fund vs. Health Care Fund |
Check out your portfolio center.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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
Commodity Channel Use Commodity Channel Index to analyze current equity momentum |