Correlation Between Transportation Fund and Telecommunications

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

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

Diversification Opportunities for Transportation Fund and Telecommunications

0.87

Correlation Coefficient

Transportation Fund  Telecommunications

Very poor diversification

The 3 months correlation between Transportation and Telecommunications is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Transportation Fund Investor and Telecommunications Fund Invest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecommunications and Transportation 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 Transportation Fund Investor are associated (or correlated) with Telecommunications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecommunications has no effect on the direction of Transportation Fund i.e., Transportation Fund and Telecommunications go up and down completely randomly.

Pair Corralation between Transportation Fund and Telecommunications

Assuming the 90 days horizon Transportation Fund Investor is expected to generate 1.64 times more return on investment than Telecommunications. However, Transportation Fund is 1.64 times more volatile than Telecommunications Fund Investor. It trades about 0.11 of its potential returns per unit of risk. Telecommunications Fund Investor is currently generating about 0.16 per unit of risk. If you would invest  5,412  in Transportation Fund Investor on May 5, 2025 and sell it today you would earn a total of  521.00  from holding Transportation Fund Investor or generate 9.63% return on investment over 90 days.

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

Transportation Fund Investor  vs.  Telecommunications Fund Invest

Transportation Fund

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Transportation Fund Investor are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Transportation Fund may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Telecommunications

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Telecommunications Fund Investor are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Telecommunications may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Transportation Fund and Telecommunications

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

The idea behind Transportation Fund Investor and Telecommunications 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.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.