Correlation Between Financial Industries and Cohen Steers
Can any of the company-specific risk be diversified away by investing in both Financial Industries and Cohen Steers 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 Financial Industries and Cohen Steers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial Industries Fund and Cohen Steers Real, you can compare the effects of market volatilities on Financial Industries and Cohen Steers 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 Financial Industries with a short position of Cohen Steers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Industries and Cohen Steers.
Diversification Opportunities for Financial Industries and Cohen Steers
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Financial and Cohen is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Financial Industries Fund and Cohen Steers Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Steers Real and Financial Industries 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 Financial Industries Fund are associated (or correlated) with Cohen Steers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Steers Real has no effect on the direction of Financial Industries i.e., Financial Industries and Cohen Steers go up and down completely randomly.
Pair Corralation between Financial Industries and Cohen Steers
Assuming the 90 days horizon Financial Industries Fund is expected to generate 1.51 times more return on investment than Cohen Steers. However, Financial Industries is 1.51 times more volatile than Cohen Steers Real. It trades about 0.03 of its potential returns per unit of risk. Cohen Steers Real is currently generating about -0.08 per unit of risk. If you would invest 1,877 in Financial Industries Fund on November 1, 2024 and sell it today you would earn a total of 37.00 from holding Financial Industries Fund or generate 1.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.33% |
| Values | Daily Returns |
Financial Industries Fund vs. Cohen Steers Real
Performance |
| Timeline |
| Financial Industries |
| Cohen Steers Real |
Financial Industries and Cohen Steers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial Industries and Cohen Steers
The main advantage of trading using opposite Financial Industries and Cohen Steers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Industries position performs unexpectedly, Cohen Steers 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 Cohen Steers will offset losses from the drop in Cohen Steers' long position.| Financial Industries vs. Columbia Capital Allocation | Financial Industries vs. Federated Hermes Conservative | Financial Industries vs. Valic Company I | Financial Industries vs. Vy T Rowe |
| Cohen Steers vs. Putnam Global Financials | Cohen Steers vs. John Hancock Financial | Cohen Steers vs. Davis Financial Fund | Cohen Steers vs. Financial Industries Fund |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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