Correlation Between Sierra Core and Financial Industries

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

By analyzing existing cross correlation between Sierra E Retirement and Financial Industries Fund, you can compare the effects of market volatilities on Sierra Core and Financial Industries 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 Sierra Core with a short position of Financial Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sierra Core and Financial Industries.

Diversification Opportunities for Sierra Core and Financial Industries

-0.35

Correlation Coefficient

Sierra Core  Financial Industries

Very good diversification

The 3 months correlation between Sierra and Financial is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Sierra E Retirement and Financial Industries Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Industries and Sierra Core 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 Sierra E Retirement are associated (or correlated) with Financial Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Industries has no effect on the direction of Sierra Core i.e., Sierra Core and Financial Industries go up and down completely randomly.

Pair Corralation between Sierra Core and Financial Industries

Assuming the 90 days horizon Sierra Core is expected to generate 7.28 times less return on investment than Financial Industries. But when comparing it to its historical volatility, Sierra E Retirement is 3.94 times less risky than Financial Industries. It trades about 0.02 of its potential returns per unit of risk. Financial Industries Fund is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,685  in Financial Industries Fund on September 6, 2025 and sell it today you would earn a total of  252.00  from holding Financial Industries Fund or generate 14.96% return on investment over 90 days.

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

Sierra E Retirement  vs.  Financial Industries Fund

Sierra E Retirement

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Sierra E Retirement are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Sierra Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Financial Industries

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Financial Industries Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Financial Industries is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sierra Core and Financial Industries

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

The idea behind Sierra E Retirement and Financial Industries Fund 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.