Correlation Between Lifestyle and Causeway Global
Can any of the company-specific risk be diversified away by investing in both Lifestyle and Causeway Global 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 Lifestyle and Causeway Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifestyle Ii Moderate and Causeway Global Value, you can compare the effects of market volatilities on Lifestyle and Causeway Global 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 Lifestyle with a short position of Causeway Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifestyle and Causeway Global.
Diversification Opportunities for Lifestyle and Causeway Global
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lifestyle and Causeway is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lifestyle Ii Moderate and Causeway Global Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Causeway Global Value and Lifestyle 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 Lifestyle Ii Moderate are associated (or correlated) with Causeway Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Causeway Global Value has no effect on the direction of Lifestyle i.e., Lifestyle and Causeway Global go up and down completely randomly.
Pair Corralation between Lifestyle and Causeway Global
Assuming the 90 days horizon Lifestyle Ii Moderate is expected to generate 0.46 times more return on investment than Causeway Global. However, Lifestyle Ii Moderate is 2.18 times less risky than Causeway Global. It trades about -0.01 of its potential returns per unit of risk. Causeway Global Value is currently generating about -0.02 per unit of risk. If you would invest 1,118 in Lifestyle Ii Moderate on August 30, 2024 and sell it today you would lose (1.00) from holding Lifestyle Ii Moderate or give up 0.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.73% |
| Values | Daily Returns |
Lifestyle Ii Moderate vs. Causeway Global Value
Performance |
| Timeline |
| Lifestyle Ii Moderate |
| Causeway Global Value |
Lifestyle and Causeway Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifestyle and Causeway Global
The main advantage of trading using opposite Lifestyle and Causeway Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifestyle position performs unexpectedly, Causeway Global 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 Causeway Global will offset losses from the drop in Causeway Global's long position.| Lifestyle vs. Hennessy Large Cap | Lifestyle vs. T Rowe Price | Lifestyle vs. Davis Financial Fund | Lifestyle vs. Pimco Capital Sec |
| Causeway Global vs. Lifestyle Ii Moderate | Causeway Global vs. Moderately Aggressive Balanced | Causeway Global vs. Franklin Lifesmart Retirement | Causeway Global vs. American Funds Retirement |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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