Correlation Between Short Term and First Investors

Can any of the company-specific risk be diversified away by investing in both Short Term and First Investors 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 and First Investors 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 First Investors Growth, you can compare the effects of market volatilities on Short Term and First Investors 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 with a short position of First Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Term and First Investors.

Diversification Opportunities for Short Term and First Investors

0.8

Correlation Coefficient

Short Term  First Investors

Very poor diversification

The 3 months correlation between Short and First is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Short Term Government Fund and First Investors Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Investors Growth and Short 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 Short Term Government Fund are associated (or correlated) with First Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Investors Growth has no effect on the direction of Short Term i.e., Short Term and First Investors go up and down completely randomly.

Pair Corralation between Short Term and First Investors

Assuming the 90 days horizon Short Term is expected to generate 6.45 times less return on investment than First Investors. But when comparing it to its historical volatility, Short Term Government Fund is 4.61 times less risky than First Investors. It trades about 0.17 of its potential returns per unit of risk. First Investors Growth is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,515  in First Investors Growth on May 27, 2025 and sell it today you would earn a total of  145.00  from holding First Investors Growth or generate 9.57% return on investment over 90 days.

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

Short Term Government Fund  vs.  First Investors Growth

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 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Short Term is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Investors Growth

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Investors Growth are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, First Investors may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Short Term and First Investors

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

The idea behind Short Term Government Fund and First Investors Growth 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 CEOs Directory module to screen CEOs from public companies around the world.