Correlation Between Total Return and BHARTI

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

By analyzing existing cross correlation between Total Return Fund and BHARTI 565, you can compare the effects of market volatilities on Total Return and BHARTI 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 Total Return with a short position of BHARTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Return and BHARTI.

Diversification Opportunities for Total Return and BHARTI

0.08

Correlation Coefficient

Total Return  BHARTI

Significant diversification

The 3 months correlation between Total and BHARTI is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Total Return Fund and BHARTI 565 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHARTI 565 and Total Return 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 Total Return Fund are associated (or correlated) with BHARTI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHARTI 565 has no effect on the direction of Total Return i.e., Total Return and BHARTI go up and down completely randomly.

Pair Corralation between Total Return and BHARTI

Assuming the 90 days horizon Total Return Fund is expected to generate 0.06 times more return on investment than BHARTI. However, Total Return Fund is 16.41 times less risky than BHARTI. It trades about 0.44 of its potential returns per unit of risk. BHARTI 565 is currently generating about -0.45 per unit of risk. If you would invest  870.00  in Total Return Fund on June 18, 2024 and sell it today you would earn a total of  17.00  from holding Total Return Fund or generate 1.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	25.0%
Values	Daily Returns

Total Return Fund  vs.  BHARTI 565

Total Return

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Total Return Fund are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Total Return is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BHARTI 565

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BHARTI 565 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in October 2024. The current disturbance may also be a sign of long term up-swing for BHARTI 565 investors.

Pair Trading with Total Return and BHARTI

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

The idea behind Total Return Fund and BHARTI 565 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.