Correlation Between Cornerstone Strategic and Ariel Focus
Can any of the company-specific risk be diversified away by investing in both Cornerstone Strategic and Ariel Focus 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 Cornerstone Strategic and Ariel Focus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cornerstone Strategic Return and Ariel Focus Fund, you can compare the effects of market volatilities on Cornerstone Strategic and Ariel Focus 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 Cornerstone Strategic with a short position of Ariel Focus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornerstone Strategic and Ariel Focus.
Diversification Opportunities for Cornerstone Strategic and Ariel Focus
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cornerstone and Ariel is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Cornerstone Strategic Return and Ariel Focus Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ariel Focus Fund and Cornerstone Strategic 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 Cornerstone Strategic Return are associated (or correlated) with Ariel Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ariel Focus Fund has no effect on the direction of Cornerstone Strategic i.e., Cornerstone Strategic and Ariel Focus go up and down completely randomly.
Pair Corralation between Cornerstone Strategic and Ariel Focus
Considering the 90-day investment horizon Cornerstone Strategic Return is expected to generate 0.88 times more return on investment than Ariel Focus. However, Cornerstone Strategic Return is 1.14 times less risky than Ariel Focus. It trades about 0.51 of its potential returns per unit of risk. Ariel Focus Fund is currently generating about 0.27 per unit of risk. If you would invest 832.00 in Cornerstone Strategic Return on September 1, 2024 and sell it today you would earn a total of 98.00 from holding Cornerstone Strategic Return or generate 11.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Cornerstone Strategic Return vs. Ariel Focus Fund
Performance |
| Timeline |
| Cornerstone Strategic |
| Ariel Focus Fund |
Cornerstone Strategic and Ariel Focus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cornerstone Strategic and Ariel Focus
The main advantage of trading using opposite Cornerstone Strategic and Ariel Focus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornerstone Strategic position performs unexpectedly, Ariel Focus 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 Ariel Focus will offset losses from the drop in Ariel Focus' long position.The idea behind Cornerstone Strategic Return and Ariel Focus 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.
| Ariel Focus vs. Ariel Appreciation Fund | Ariel Focus vs. Ariel Fund Investor | Ariel Focus vs. Ariel Global Fund | Ariel Focus vs. Ariel International Fund |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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