Correlation Between Technology Fund and Bts Enhanced

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

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

Diversification Opportunities for Technology Fund and Bts Enhanced

0.93

Correlation Coefficient

Technology Fund  Bts Enhanced

Almost no diversification

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

Pair Corralation between Technology Fund and Bts Enhanced

Assuming the 90 days horizon Technology Fund Class is expected to generate 1.96 times more return on investment than Bts Enhanced. However, Technology Fund is 1.96 times more volatile than Bts Enhanced Equity. It trades about 0.43 of its potential returns per unit of risk. Bts Enhanced Equity is currently generating about 0.16 per unit of risk. If you would invest  14,581  in Technology Fund Class on April 20, 2025 and sell it today you would earn a total of  5,702  from holding Technology Fund Class or generate 39.11% return on investment over 90 days.

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

Technology Fund Class  vs.  Bts Enhanced Equity

Technology Fund Class

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Technology Fund Class are ranked lower than 33 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Technology Fund showed solid returns over the last few months and may actually be approaching a breakup point.

Bts Enhanced Equity

Risk-Adjusted Performance

Good

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

Pair Trading with Technology Fund and Bts Enhanced

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

The idea behind Technology Fund Class and Bts Enhanced Equity 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.