Correlation Between Cutler Equity and Grant Park
Can any of the company-specific risk be diversified away by investing in both Cutler Equity and Grant Park 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 Cutler Equity and Grant Park into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cutler Equity and Grant Park Multi, you can compare the effects of market volatilities on Cutler Equity and Grant Park 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 Cutler Equity with a short position of Grant Park. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cutler Equity and Grant Park.
Diversification Opportunities for Cutler Equity and Grant Park
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cutler and Grant is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Cutler Equity and Grant Park Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grant Park Multi and Cutler Equity 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 Cutler Equity are associated (or correlated) with Grant Park. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grant Park Multi has no effect on the direction of Cutler Equity i.e., Cutler Equity and Grant Park go up and down completely randomly.
Pair Corralation between Cutler Equity and Grant Park
Assuming the 90 days horizon Cutler Equity is expected to generate 1.8 times more return on investment than Grant Park. However, Cutler Equity is 1.8 times more volatile than Grant Park Multi. It trades about 0.07 of its potential returns per unit of risk. Grant Park Multi is currently generating about 0.02 per unit of risk. If you would invest 2,328 in Cutler Equity on September 3, 2024 and sell it today you would earn a total of 619.00 from holding Cutler Equity or generate 26.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cutler Equity vs. Grant Park Multi
Performance |
| Timeline |
| Cutler Equity |
| Grant Park Multi |
Cutler Equity and Grant Park Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cutler Equity and Grant Park
The main advantage of trading using opposite Cutler Equity and Grant Park positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cutler Equity position performs unexpectedly, Grant Park 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 Grant Park will offset losses from the drop in Grant Park's long position.| Cutler Equity vs. Advent Claymore Convertible | Cutler Equity vs. Gabelli Convertible And | Cutler Equity vs. Fidelity Sai Convertible | Cutler Equity vs. Calamos Dynamic Convertible |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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