Correlation Between Centre Global and Centre American
Can any of the company-specific risk be diversified away by investing in both Centre Global and Centre American 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 Centre Global and Centre American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centre Global Infrastructure and Centre American Select, you can compare the effects of market volatilities on Centre Global and Centre American 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 Centre Global with a short position of Centre American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centre Global and Centre American.
Diversification Opportunities for Centre Global and Centre American
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Centre and Centre is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Centre Global Infrastructure and Centre American Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centre American Select and Centre 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 Centre Global Infrastructure are associated (or correlated) with Centre American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centre American Select has no effect on the direction of Centre Global i.e., Centre Global and Centre American go up and down completely randomly.
Pair Corralation between Centre Global and Centre American
Assuming the 90 days horizon Centre Global Infrastructure is expected to generate 0.23 times more return on investment than Centre American. However, Centre Global Infrastructure is 4.41 times less risky than Centre American. It trades about 0.38 of its potential returns per unit of risk. Centre American Select is currently generating about -0.2 per unit of risk. If you would invest 1,166 in Centre Global Infrastructure on October 21, 2024 and sell it today you would earn a total of 48.00 from holding Centre Global Infrastructure or generate 4.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centre Global Infrastructure vs. Centre American Select
Performance |
| Timeline |
| Centre Global Infras |
| Centre American Select |
Centre Global and Centre American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centre Global and Centre American
The main advantage of trading using opposite Centre Global and Centre American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centre Global position performs unexpectedly, Centre American 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 Centre American will offset losses from the drop in Centre American's long position.| Centre Global vs. Centre Global Infrastructure | Centre Global vs. Centre American Select | Centre Global vs. Centre American Select | Centre Global vs. Voya Floating Rate |
| Centre American vs. Centre Global Infrastructure | Centre American vs. Centre American Select | Centre American vs. Massmutual Premier High | Centre American vs. Neuberger Berman Long |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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