Correlation Between European Equity and Cornerstone Strategic
Can any of the company-specific risk be diversified away by investing in both European Equity and Cornerstone Strategic 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 European Equity and Cornerstone Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Equity Closed and Cornerstone Strategic Value, you can compare the effects of market volatilities on European Equity and Cornerstone Strategic 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 European Equity with a short position of Cornerstone Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Equity and Cornerstone Strategic.
Diversification Opportunities for European Equity and Cornerstone Strategic
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between European and Cornerstone is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding European Equity Closed and Cornerstone Strategic Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornerstone Strategic and European 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 European Equity Closed are associated (or correlated) with Cornerstone Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornerstone Strategic has no effect on the direction of European Equity i.e., European Equity and Cornerstone Strategic go up and down completely randomly.
Pair Corralation between European Equity and Cornerstone Strategic
Considering the 90-day investment horizon European Equity is expected to generate 12.04 times less return on investment than Cornerstone Strategic. But when comparing it to its historical volatility, European Equity Closed is 1.39 times less risky than Cornerstone Strategic. It trades about 0.01 of its potential returns per unit of risk. Cornerstone Strategic Value is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 679.00 in Cornerstone Strategic Value on September 12, 2024 and sell it today you would earn a total of 142.00 from holding Cornerstone Strategic Value or generate 20.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Equity Closed vs. Cornerstone Strategic Value
Performance |
| Timeline |
| European Equity Closed |
| Cornerstone Strategic |
European Equity and Cornerstone Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Equity and Cornerstone Strategic
The main advantage of trading using opposite European Equity and Cornerstone Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Equity position performs unexpectedly, Cornerstone Strategic 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 Cornerstone Strategic will offset losses from the drop in Cornerstone Strategic's long position.| European Equity vs. Cornerstone Strategic Value | European Equity vs. Oxford Lane Capital | European Equity vs. Orchid Island Capital | European Equity vs. Guggenheim Strategic Opportunities |
| Cornerstone Strategic vs. Oxford Lane Capital | Cornerstone Strategic vs. Orchid Island Capital | Cornerstone Strategic vs. Guggenheim Strategic Opportunities | Cornerstone Strategic vs. Stone Harbor Emerging |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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