Correlation Between Intermediate Term and Ellsworth Fund

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

By analyzing existing cross correlation between Intermediate Term Tax Free Bond and Ellsworth Fund, you can compare the effects of market volatilities on Intermediate Term and Ellsworth Fund 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 Intermediate Term with a short position of Ellsworth Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate Term and Ellsworth Fund.

Diversification Opportunities for Intermediate Term and Ellsworth Fund

0.44

Correlation Coefficient

Intermediate Term  Ellsworth Fund

Very weak diversification

The 3 months correlation between Intermediate and Ellsworth is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Term Tax Free Bon and Ellsworth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ellsworth Fund and Intermediate Term 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 Intermediate Term Tax Free Bond are associated (or correlated) with Ellsworth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ellsworth Fund has no effect on the direction of Intermediate Term i.e., Intermediate Term and Ellsworth Fund go up and down completely randomly.

Pair Corralation between Intermediate Term and Ellsworth Fund

Assuming the 90 days horizon Intermediate Term is expected to generate 64.75 times less return on investment than Ellsworth Fund. But when comparing it to its historical volatility, Intermediate Term Tax Free Bond is 6.06 times less risky than Ellsworth Fund. It trades about 0.03 of its potential returns per unit of risk. Ellsworth Fund is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  1,060  in Ellsworth Fund on May 3, 2025 and sell it today you would earn a total of  141.00  from holding Ellsworth Fund or generate 13.3% return on investment over 90 days.

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

Intermediate Term Tax Free Bon  vs.  Ellsworth Fund

Intermediate Term Tax

Risk-Adjusted Performance

Weak

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

Ellsworth Fund

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ellsworth Fund are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Ellsworth Fund showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intermediate Term and Ellsworth Fund

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

The idea behind Intermediate Term Tax Free Bond and Ellsworth 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.