Correlation Between Causeway International and College Retirement
Can any of the company-specific risk be diversified away by investing in both Causeway International 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 Causeway International and College Retirement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Causeway International Opportunities and College Retirement Equities, you can compare the effects of market volatilities on Causeway International 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 Causeway International with a short position of College Retirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Causeway International and College Retirement.
Diversification Opportunities for Causeway International and College Retirement
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Causeway and College is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Causeway International Opportu and College Retirement Equities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on College Retirement and Causeway International 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 International Opportunities 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 Causeway International i.e., Causeway International and College Retirement go up and down completely randomly.
Pair Corralation between Causeway International and College Retirement
Assuming the 90 days horizon Causeway International Opportunities is expected to under-perform the College Retirement. But the mutual fund apears to be less risky and, when comparing its historical volatility, Causeway International Opportunities is 1.4 times less risky than College Retirement. The mutual fund trades about -0.22 of its potential returns per unit of risk. The College Retirement Equities is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 35,115 in College Retirement Equities on October 9, 2024 and sell it today you would lose (603.00) from holding College Retirement Equities or give up 1.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Causeway International Opportu vs. College Retirement Equities
Performance |
| Timeline |
| Causeway International |
| College Retirement |
Causeway International and College Retirement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Causeway International and College Retirement
The main advantage of trading using opposite Causeway International and College Retirement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Causeway International 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.The idea behind Causeway International Opportunities and College Retirement Equities 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.
| College Retirement vs. Vanguard Total Stock | College Retirement vs. Vanguard 500 Index | College Retirement vs. Vanguard Total Stock | College Retirement vs. Vanguard Total Stock |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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