Correlation Between Pro-blend(r) Conservative and Pro Blend

Can any of the company-specific risk be diversified away by investing in both Pro-blend(r) Conservative and Pro Blend 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 Pro-blend(r) Conservative and Pro Blend into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pro Blend Servative Term and Pro Blend Maximum Term, you can compare the effects of market volatilities on Pro-blend(r) Conservative and Pro Blend 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 Pro-blend(r) Conservative with a short position of Pro Blend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pro-blend(r) Conservative and Pro Blend.

Diversification Opportunities for Pro-blend(r) Conservative and Pro Blend

0.96

Correlation Coefficient

Pro-blend(r) Conservative  Pro Blend

Almost no diversification

The 3 months correlation between Pro-blend(r) and Pro is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Pro Blend Servative Term and Pro Blend Maximum Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro Blend Maximum and Pro-blend(r) Conservative 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 Pro Blend Servative Term are associated (or correlated) with Pro Blend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro Blend Maximum has no effect on the direction of Pro-blend(r) Conservative i.e., Pro-blend(r) Conservative and Pro Blend go up and down completely randomly.

Pair Corralation between Pro-blend(r) Conservative and Pro Blend

Assuming the 90 days horizon Pro-blend(r) Conservative is expected to generate 3.24 times less return on investment than Pro Blend. But when comparing it to its historical volatility, Pro Blend Servative Term is 2.83 times less risky than Pro Blend. It trades about 0.26 of its potential returns per unit of risk. Pro Blend Maximum Term is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  2,310  in Pro Blend Maximum Term on April 20, 2025 and sell it today you would earn a total of  346.00  from holding Pro Blend Maximum Term or generate 14.98% return on investment over 90 days.

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

Pro Blend Servative Term  vs.  Pro Blend Maximum Term

Pro-blend(r) Conservative

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pro Blend Servative Term are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Pro-blend(r) Conservative is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pro Blend Maximum

Risk-Adjusted Performance

Solid

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

Pair Trading with Pro-blend(r) Conservative and Pro Blend

The main advantage of trading using opposite Pro-blend(r) Conservative and Pro Blend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pro-blend(r) Conservative position performs unexpectedly, Pro Blend 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 Pro Blend will offset losses from the drop in Pro Blend's long position.

The idea behind Pro Blend Servative Term and Pro Blend Maximum Term 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.