Correlation Between Cornerstone Strategic and Sextant Bond
Can any of the company-specific risk be diversified away by investing in both Cornerstone Strategic and Sextant Bond 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 Sextant Bond 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 Sextant Bond Income, you can compare the effects of market volatilities on Cornerstone Strategic and Sextant Bond 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 Sextant Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornerstone Strategic and Sextant Bond.
Diversification Opportunities for Cornerstone Strategic and Sextant Bond
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cornerstone and Sextant is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Cornerstone Strategic Return and Sextant Bond Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sextant Bond Income 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 Sextant Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sextant Bond Income has no effect on the direction of Cornerstone Strategic i.e., Cornerstone Strategic and Sextant Bond go up and down completely randomly.
Pair Corralation between Cornerstone Strategic and Sextant Bond
Considering the 90-day investment horizon Cornerstone Strategic Return is expected to under-perform the Sextant Bond. In addition to that, Cornerstone Strategic is 7.47 times more volatile than Sextant Bond Income. It trades about -0.11 of its total potential returns per unit of risk. Sextant Bond Income is currently generating about -0.46 per unit of volatility. If you would invest 445.00 in Sextant Bond Income on October 7, 2024 and sell it today you would lose (15.00) from holding Sextant Bond Income or give up 3.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cornerstone Strategic Return vs. Sextant Bond Income
Performance |
| Timeline |
| Cornerstone Strategic |
| Sextant Bond Income |
Cornerstone Strategic and Sextant Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cornerstone Strategic and Sextant Bond
The main advantage of trading using opposite Cornerstone Strategic and Sextant Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornerstone Strategic position performs unexpectedly, Sextant Bond 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 Sextant Bond will offset losses from the drop in Sextant Bond's long position.The idea behind Cornerstone Strategic Return and Sextant Bond 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.
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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