Correlation Between Cabana Target and IShares Core
Can any of the company-specific risk be diversified away by investing in both Cabana Target and IShares Core 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 Cabana Target and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cabana Target Leading and iShares Core Growth, you can compare the effects of market volatilities on Cabana Target and IShares Core 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 Cabana Target with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cabana Target and IShares Core.
Diversification Opportunities for Cabana Target and IShares Core
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cabana and IShares is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Cabana Target Leading and iShares Core Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Growth and Cabana Target 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 Cabana Target Leading are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core Growth has no effect on the direction of Cabana Target i.e., Cabana Target and IShares Core go up and down completely randomly.
Pair Corralation between Cabana Target and IShares Core
Given the investment horizon of 90 days Cabana Target Leading is expected to generate 1.74 times more return on investment than IShares Core. However, Cabana Target is 1.74 times more volatile than iShares Core Growth. It trades about 0.14 of its potential returns per unit of risk. iShares Core Growth is currently generating about 0.08 per unit of risk. If you would invest 2,128 in Cabana Target Leading on August 30, 2024 and sell it today you would earn a total of 49.00 from holding Cabana Target Leading or generate 2.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cabana Target Leading vs. iShares Core Growth
Performance |
| Timeline |
| Cabana Target Leading |
| iShares Core Growth |
Cabana Target and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cabana Target and IShares Core
The main advantage of trading using opposite Cabana Target and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cabana Target position performs unexpectedly, IShares Core 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 IShares Core will offset losses from the drop in IShares Core's long position.| Cabana Target vs. iShares Core Growth | Cabana Target vs. Alpha Architect Gdsdn | Cabana Target vs. STF Tactical Growth | Cabana Target vs. VanEck Inflation Allocation |
| IShares Core vs. iShares Core Moderate | IShares Core vs. iShares Core Aggressive | IShares Core vs. iShares Core Conservative | IShares Core vs. Vanguard Mega Cap |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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