Correlation Between Short-term Government and Performance Trust

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

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

Diversification Opportunities for Short-term Government and Performance Trust

0.94

Correlation Coefficient

Short-term Government  Performance Trust

Almost no diversification

The 3 months correlation between Short-term and Performance is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Short Term Government Fund and Performance Trust Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Trust and Short-term Government 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 Short Term Government Fund are associated (or correlated) with Performance Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Trust has no effect on the direction of Short-term Government i.e., Short-term Government and Performance Trust go up and down completely randomly.

Pair Corralation between Short-term Government and Performance Trust

Assuming the 90 days horizon Short-term Government is expected to generate 3.15 times less return on investment than Performance Trust. But when comparing it to its historical volatility, Short Term Government Fund is 2.45 times less risky than Performance Trust. It trades about 0.16 of its potential returns per unit of risk. Performance Trust Strategic is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,933  in Performance Trust Strategic on July 11, 2025 and sell it today you would earn a total of  62.00  from holding Performance Trust Strategic or generate 3.21% return on investment over 90 days.

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

Short Term Government Fund  vs.  Performance Trust Strategic

Short Term Government

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Short Term Government Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Short-term Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Performance Trust

Risk-Adjusted Performance

Good

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

Pair Trading with Short-term Government and Performance Trust

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

The idea behind Short Term Government Fund and Performance Trust Strategic 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.