Correlation Between Applied Finance and College Retirement
Can any of the company-specific risk be diversified away by investing in both Applied Finance and College Retirement 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 Applied Finance and College Retirement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Explorer and College Retirement Equities, you can compare the effects of market volatilities on Applied Finance and College Retirement 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 Applied Finance with a short position of College Retirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and College Retirement.
Diversification Opportunities for Applied Finance and College Retirement
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Applied and College is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and College Retirement Equities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on College Retirement and Applied Finance 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 Applied Finance Explorer are associated (or correlated) with College Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of College Retirement has no effect on the direction of Applied Finance i.e., Applied Finance and College Retirement go up and down completely randomly.
Pair Corralation between Applied Finance and College Retirement
Assuming the 90 days horizon Applied Finance Explorer is expected to generate 1.1 times more return on investment than College Retirement. However, Applied Finance is 1.1 times more volatile than College Retirement Equities. It trades about 0.22 of its potential returns per unit of risk. College Retirement Equities is currently generating about 0.17 per unit of risk. If you would invest 2,190 in Applied Finance Explorer on November 4, 2024 and sell it today you would earn a total of 93.00 from holding Applied Finance Explorer or generate 4.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Explorer vs. College Retirement Equities
Performance |
| Timeline |
| Applied Finance Explorer |
| College Retirement |
Applied Finance and College Retirement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and College Retirement
The main advantage of trading using opposite Applied Finance and College Retirement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, College Retirement 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 College Retirement will offset losses from the drop in College Retirement's long position.| Applied Finance vs. Thrivent Small Cap | Applied Finance vs. Applied Finance Select | Applied Finance vs. Parnassus Endeavor Fund | Applied Finance vs. Queens Road Small |
| College Retirement vs. Artisan Select Equity | College Retirement vs. Gmo International Equity | College Retirement vs. Nuveen Core Equity | College Retirement vs. Qs Global Equity |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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