Correlation Between Commonwealth Global and Lifex Income
Can any of the company-specific risk be diversified away by investing in both Commonwealth Global and Lifex Income 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 Lifex Income 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 Lifex Income, you can compare the effects of market volatilities on Commonwealth Global and Lifex Income 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 Lifex Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Global and Lifex Income.
Diversification Opportunities for Commonwealth Global and Lifex Income
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Commonwealth and Lifex is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Global Fund and Lifex Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifex Income 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 Lifex Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifex Income has no effect on the direction of Commonwealth Global i.e., Commonwealth Global and Lifex Income go up and down completely randomly.
Pair Corralation between Commonwealth Global and Lifex Income
If you would invest 2,081 in Commonwealth Global Fund on September 1, 2024 and sell it today you would earn a total of 91.00 from holding Commonwealth Global Fund or generate 4.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Commonwealth Global Fund vs. Lifex Income
Performance |
| Timeline |
| Commonwealth Global |
| Lifex Income |
Commonwealth Global and Lifex Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Global and Lifex Income
The main advantage of trading using opposite Commonwealth Global and Lifex Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Global position performs unexpectedly, Lifex Income 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 Lifex Income will offset losses from the drop in Lifex Income's long position.The idea behind Commonwealth Global Fund and Lifex Income 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.
| Lifex Income vs. Lifex Inflation Protected Income | Lifex Income vs. Lifex Inflation Protected Income | Lifex Income vs. Lifex Inflation Protected Income | Lifex Income vs. Lifex Inflation Protected Income |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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