Correlation Between Strategic Allocation and Green Century
Can any of the company-specific risk be diversified away by investing in both Strategic Allocation and Green Century 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 Strategic Allocation and Green Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Allocation Servative and Green Century Equity, you can compare the effects of market volatilities on Strategic Allocation and Green Century 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 Strategic Allocation with a short position of Green Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Allocation and Green Century.
Diversification Opportunities for Strategic Allocation and Green Century
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Strategic and Green is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Allocation Servative and Green Century Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Century Equity and Strategic Allocation 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 Strategic Allocation Servative are associated (or correlated) with Green Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Century Equity has no effect on the direction of Strategic Allocation i.e., Strategic Allocation and Green Century go up and down completely randomly.
Pair Corralation between Strategic Allocation and Green Century
Assuming the 90 days horizon Strategic Allocation is expected to generate 1.84 times less return on investment than Green Century. But when comparing it to its historical volatility, Strategic Allocation Servative is 2.53 times less risky than Green Century. It trades about 0.15 of its potential returns per unit of risk. Green Century Equity is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 8,289 in Green Century Equity on September 1, 2024 and sell it today you would earn a total of 1,083 from holding Green Century Equity or generate 13.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strategic Allocation Servative vs. Green Century Equity
Performance |
| Timeline |
| Strategic Allocation |
| Green Century Equity |
Strategic Allocation and Green Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Allocation and Green Century
The main advantage of trading using opposite Strategic Allocation and Green Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Allocation position performs unexpectedly, Green Century 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 Green Century will offset losses from the drop in Green Century's long position.| Strategic Allocation vs. Mid Cap Value | Strategic Allocation vs. Equity Growth Fund | Strategic Allocation vs. Income Growth Fund | Strategic Allocation vs. Diversified Bond Fund |
| Green Century vs. Green Century Balanced | Green Century vs. Portfolio 21 Global | Green Century vs. New Alternatives Fund | Green Century vs. Pax Esg Beta |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |