Correlation Between Select Fund and Equity Income
Can any of the company-specific risk be diversified away by investing in both Select Fund and Equity Income 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 Select Fund and Equity Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Select Fund Investor and Equity Income Fund, you can compare the effects of market volatilities on Select Fund and Equity Income 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 Select Fund with a short position of Equity Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Fund and Equity Income.
Diversification Opportunities for Select Fund and Equity Income
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Select and Equity is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Select Fund Investor and Equity Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Income and Select 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 Select Fund Investor are associated (or correlated) with Equity Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Income has no effect on the direction of Select Fund i.e., Select Fund and Equity Income go up and down completely randomly.
Pair Corralation between Select Fund and Equity Income
Assuming the 90 days horizon Select Fund Investor is expected to generate 1.5 times more return on investment than Equity Income. However, Select Fund is 1.5 times more volatile than Equity Income Fund. It trades about 0.29 of its potential returns per unit of risk. Equity Income Fund is currently generating about 0.19 per unit of risk. If you would invest 10,959 in Select Fund Investor on April 29, 2025 and sell it today you would earn a total of 1,995 from holding Select Fund Investor or generate 18.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Select Fund Investor vs. Equity Income Fund
Performance |
Timeline |
Select Fund Investor |
Equity Income |
Select Fund and Equity Income Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Select Fund and Equity Income
The main advantage of trading using opposite Select Fund and Equity Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Fund position performs unexpectedly, Equity Income 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 Equity Income will offset losses from the drop in Equity Income's long position.Select Fund vs. Growth Fund Investor | Select Fund vs. Ultra Fund Investor | Select Fund vs. Heritage Fund Investor | Select Fund vs. International Growth Fund |
Equity Income vs. Smallcap World Fund | Equity Income vs. Gmo Global Equity | Equity Income vs. Ab Select Equity | Equity Income vs. The Growth Equity |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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