Correlation Between Commonwealth Global and Kellner Merger
Can any of the company-specific risk be diversified away by investing in both Commonwealth Global and Kellner Merger 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 Commonwealth Global and Kellner Merger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Global Fund and Kellner Merger Fund, you can compare the effects of market volatilities on Commonwealth Global and Kellner Merger 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 Commonwealth Global with a short position of Kellner Merger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Global and Kellner Merger.
Diversification Opportunities for Commonwealth Global and Kellner Merger
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Commonwealth and Kellner is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Global Fund and Kellner Merger Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellner Merger and Commonwealth 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 Commonwealth Global Fund are associated (or correlated) with Kellner Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kellner Merger has no effect on the direction of Commonwealth Global i.e., Commonwealth Global and Kellner Merger go up and down completely randomly.
Pair Corralation between Commonwealth Global and Kellner Merger
Assuming the 90 days horizon Commonwealth Global Fund is expected to generate 6.07 times more return on investment than Kellner Merger. However, Commonwealth Global is 6.07 times more volatile than Kellner Merger Fund. It trades about 0.12 of its potential returns per unit of risk. Kellner Merger Fund is currently generating about -0.05 per unit of risk. If you would invest 2,141 in Commonwealth Global Fund on September 13, 2024 and sell it today you would earn a total of 31.00 from holding Commonwealth Global Fund or generate 1.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commonwealth Global Fund vs. Kellner Merger Fund
Performance |
| Timeline |
| Commonwealth Global |
| Kellner Merger |
Commonwealth Global and Kellner Merger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Global and Kellner Merger
The main advantage of trading using opposite Commonwealth Global and Kellner Merger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Global position performs unexpectedly, Kellner Merger 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 Kellner Merger will offset losses from the drop in Kellner Merger's long position.The idea behind Commonwealth Global Fund and Kellner Merger Fund 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.
| Kellner Merger vs. Nasdaq 100 Index Fund | Kellner Merger vs. Commonwealth Global Fund | Kellner Merger vs. Commodities Strategy Fund | Kellner Merger vs. Balanced Fund Investor |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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