Correlation Between Salient Tactical and Salient International
Can any of the company-specific risk be diversified away by investing in both Salient Tactical and Salient International 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 Salient Tactical and Salient International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salient Tactical Plus and Salient International Real, you can compare the effects of market volatilities on Salient Tactical and Salient International 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 Salient Tactical with a short position of Salient International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salient Tactical and Salient International.
Diversification Opportunities for Salient Tactical and Salient International
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Salient and Salient is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Salient Tactical Plus and Salient International Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient International and Salient Tactical 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 Salient Tactical Plus are associated (or correlated) with Salient International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient International has no effect on the direction of Salient Tactical i.e., Salient Tactical and Salient International go up and down completely randomly.
Pair Corralation between Salient Tactical and Salient International
Assuming the 90 days horizon Salient Tactical is expected to generate 17.28 times less return on investment than Salient International. But when comparing it to its historical volatility, Salient Tactical Plus is 2.14 times less risky than Salient International. It trades about 0.0 of its potential returns per unit of risk. Salient International Real is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,161 in Salient International Real on August 29, 2024 and sell it today you would earn a total of 165.00 from holding Salient International Real or generate 14.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salient Tactical Plus vs. Salient International Real
Performance |
| Timeline |
| Salient Tactical Plus |
| Salient International |
Salient Tactical and Salient International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salient Tactical and Salient International
The main advantage of trading using opposite Salient Tactical and Salient International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salient Tactical position performs unexpectedly, Salient International 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 Salient International will offset losses from the drop in Salient International's long position.| Salient Tactical vs. Lord Abbett Diversified | Salient Tactical vs. Pgim Jennison Diversified | Salient Tactical vs. Tiaa Cref Small Cap Blend | Salient Tactical vs. Wasatch Small Cap |
| Salient International vs. HUMANA INC | Salient International vs. Aquagold International | Salient International vs. Barloworld Ltd ADR | Salient International vs. Morningstar Unconstrained Allocation |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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