Correlation Between Causeway Global and Lifestyle
Can any of the company-specific risk be diversified away by investing in both Causeway Global and Lifestyle 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 Causeway Global and Lifestyle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Causeway Global Value and Lifestyle Ii Moderate, you can compare the effects of market volatilities on Causeway Global and Lifestyle 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 Causeway Global with a short position of Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Causeway Global and Lifestyle.
Diversification Opportunities for Causeway Global and Lifestyle
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Causeway and Lifestyle is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Causeway Global Value and Lifestyle Ii Moderate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifestyle Ii Moderate and Causeway Global 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 Causeway Global Value are associated (or correlated) with Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifestyle Ii Moderate has no effect on the direction of Causeway Global i.e., Causeway Global and Lifestyle go up and down completely randomly.
Pair Corralation between Causeway Global and Lifestyle
Assuming the 90 days horizon Causeway Global is expected to generate 2.01 times less return on investment than Lifestyle. In addition to that, Causeway Global is 1.96 times more volatile than Lifestyle Ii Moderate. It trades about 0.04 of its total potential returns per unit of risk. Lifestyle Ii Moderate is currently generating about 0.17 per unit of volatility. If you would invest 1,103 in Lifestyle Ii Moderate on August 30, 2024 and sell it today you would earn a total of 14.00 from holding Lifestyle Ii Moderate or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Causeway Global Value vs. Lifestyle Ii Moderate
Performance |
| Timeline |
| Causeway Global Value |
| Lifestyle Ii Moderate |
Causeway Global and Lifestyle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Causeway Global and Lifestyle
The main advantage of trading using opposite Causeway Global and Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Causeway Global position performs unexpectedly, Lifestyle 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 Lifestyle will offset losses from the drop in Lifestyle's long position.| Causeway Global vs. Lifestyle Ii Moderate | Causeway Global vs. Moderately Aggressive Balanced | Causeway Global vs. Franklin Lifesmart Retirement | Causeway Global vs. American Funds Retirement |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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