Correlation Between Transportation Fund and Consumer Goods

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

By analyzing existing cross correlation between Transportation Fund Investor and Consumer Goods Ultrasector, you can compare the effects of market volatilities on Transportation Fund and Consumer Goods 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 Transportation Fund with a short position of Consumer Goods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transportation Fund and Consumer Goods.

Diversification Opportunities for Transportation Fund and Consumer Goods

-0.52

Correlation Coefficient

Transportation Fund  Consumer Goods

Excellent diversification

The 3 months correlation between Transportation and Consumer is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Transportation Fund Investor and Consumer Goods Ultrasector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Goods Ultra and Transportation 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 Transportation Fund Investor are associated (or correlated) with Consumer Goods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Goods Ultra has no effect on the direction of Transportation Fund i.e., Transportation Fund and Consumer Goods go up and down completely randomly.

Pair Corralation between Transportation Fund and Consumer Goods

Assuming the 90 days horizon Transportation Fund Investor is expected to generate 1.09 times more return on investment than Consumer Goods. However, Transportation Fund is 1.09 times more volatile than Consumer Goods Ultrasector. It trades about 0.01 of its potential returns per unit of risk. Consumer Goods Ultrasector is currently generating about -0.09 per unit of risk. If you would invest  6,398  in Transportation Fund Investor on August 25, 2025 and sell it today you would earn a total of  10.00  from holding Transportation Fund Investor or generate 0.16% return on investment over 90 days.

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

Transportation Fund Investor  vs.  Consumer Goods Ultrasector

Transportation Fund

Risk-Adjusted Performance

Weakest

Over the last 90 days Transportation Fund Investor has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Transportation Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Consumer Goods Ultra

Risk-Adjusted Performance

Weakest

Over the last 90 days Consumer Goods Ultrasector has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Consumer Goods is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Transportation Fund and Consumer Goods

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

The idea behind Transportation Fund Investor and Consumer Goods Ultrasector 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.