Correlation Between Cornerstone Strategic and FAM
Can any of the company-specific risk be diversified away by investing in both Cornerstone Strategic and FAM 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 FAM 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 FAM, you can compare the effects of market volatilities on Cornerstone Strategic and FAM 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 FAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornerstone Strategic and FAM.
Diversification Opportunities for Cornerstone Strategic and FAM
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cornerstone and FAM is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Cornerstone Strategic Return and FAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAM 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 FAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAM has no effect on the direction of Cornerstone Strategic i.e., Cornerstone Strategic and FAM go up and down completely randomly.
Pair Corralation between Cornerstone Strategic and FAM
Considering the 90-day investment horizon Cornerstone Strategic Return is expected to generate 1.41 times more return on investment than FAM. However, Cornerstone Strategic is 1.41 times more volatile than FAM. It trades about 0.22 of its potential returns per unit of risk. FAM is currently generating about 0.15 per unit of risk. If you would invest 720.00 in Cornerstone Strategic Return on September 5, 2024 and sell it today you would earn a total of 237.00 from holding Cornerstone Strategic Return or generate 32.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 60.0% |
| Values | Daily Returns |
Cornerstone Strategic Return vs. FAM
Performance |
| Timeline |
| Cornerstone Strategic |
| FAM |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Cornerstone Strategic and FAM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cornerstone Strategic and FAM
The main advantage of trading using opposite Cornerstone Strategic and FAM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornerstone Strategic position performs unexpectedly, FAM 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 FAM will offset losses from the drop in FAM's long position.The idea behind Cornerstone Strategic Return and FAM 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.
| FAM vs. Blackstone Gso Long | FAM vs. Blackstone Gso Senior | FAM vs. Nuveen Floating Rate | FAM vs. Pioneer Floating Rate |
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 Stocks Directory module to find actively traded stocks across global markets.
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