Correlation Between Quantitative Longshort and Cavanal Hill
Can any of the company-specific risk be diversified away by investing in both Quantitative Longshort and Cavanal Hill 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 Quantitative Longshort and Cavanal Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quantitative Longshort Equity and Cavanal Hill Funds, you can compare the effects of market volatilities on Quantitative Longshort and Cavanal Hill 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 Quantitative Longshort with a short position of Cavanal Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quantitative Longshort and Cavanal Hill.
Diversification Opportunities for Quantitative Longshort and Cavanal Hill
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Quantitative and Cavanal is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Quantitative Longshort Equity and Cavanal Hill Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cavanal Hill Funds and Quantitative Longshort 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 Quantitative Longshort Equity are associated (or correlated) with Cavanal Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cavanal Hill Funds has no effect on the direction of Quantitative Longshort i.e., Quantitative Longshort and Cavanal Hill go up and down completely randomly.
Pair Corralation between Quantitative Longshort and Cavanal Hill
Assuming the 90 days horizon Quantitative Longshort is expected to generate 57.54 times less return on investment than Cavanal Hill. But when comparing it to its historical volatility, Quantitative Longshort Equity is 86.82 times less risky than Cavanal Hill. It trades about 0.1 of its potential returns per unit of risk. Cavanal Hill Funds is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 382.00 in Cavanal Hill Funds on September 12, 2024 and sell it today you would lose (282.00) from holding Cavanal Hill Funds or give up 73.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.6% |
| Values | Daily Returns |
Quantitative Longshort Equity vs. Cavanal Hill Funds
Performance |
| Timeline |
| Quantitative Longshort |
| Cavanal Hill Funds |
Quantitative Longshort and Cavanal Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quantitative Longshort and Cavanal Hill
The main advantage of trading using opposite Quantitative Longshort and Cavanal Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quantitative Longshort position performs unexpectedly, Cavanal Hill 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 Cavanal Hill will offset losses from the drop in Cavanal Hill's long position.| Quantitative Longshort vs. Neuberger Berman Long | Quantitative Longshort vs. Neuberger Berman Long | Quantitative Longshort vs. Neuberger Berman Long | Quantitative Longshort vs. Aqr Long Short Equity |
| Cavanal Hill vs. Vanguard Total Stock | Cavanal Hill vs. Vanguard 500 Index | Cavanal Hill vs. Vanguard Total Stock | Cavanal Hill vs. Vanguard Total Stock |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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