Correlation Between Lifestyle and Pro-blend(r) Moderate
Can any of the company-specific risk be diversified away by investing in both Lifestyle and Pro-blend(r) Moderate 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 Pro-blend(r) Moderate 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 Pro Blend Moderate Term, you can compare the effects of market volatilities on Lifestyle and Pro-blend(r) Moderate 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 Pro-blend(r) Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifestyle and Pro-blend(r) Moderate.
Diversification Opportunities for Lifestyle and Pro-blend(r) Moderate
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lifestyle and Pro-blend(r) is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Lifestyle Ii Moderate and Pro Blend Moderate Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro-blend(r) Moderate 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 Pro-blend(r) Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro-blend(r) Moderate has no effect on the direction of Lifestyle i.e., Lifestyle and Pro-blend(r) Moderate go up and down completely randomly.
Pair Corralation between Lifestyle and Pro-blend(r) Moderate
Assuming the 90 days horizon Lifestyle is expected to generate 1.03 times less return on investment than Pro-blend(r) Moderate. But when comparing it to its historical volatility, Lifestyle Ii Moderate is 1.19 times less risky than Pro-blend(r) Moderate. It trades about 0.09 of its potential returns per unit of risk. Pro Blend Moderate Term is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,480 in Pro Blend Moderate Term on August 29, 2024 and sell it today you would earn a total of 10.00 from holding Pro Blend Moderate Term or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lifestyle Ii Moderate vs. Pro Blend Moderate Term
Performance |
| Timeline |
| Lifestyle Ii Moderate |
| Pro-blend(r) Moderate |
Lifestyle and Pro-blend(r) Moderate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifestyle and Pro-blend(r) Moderate
The main advantage of trading using opposite Lifestyle and Pro-blend(r) Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifestyle position performs unexpectedly, Pro-blend(r) Moderate 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 Pro-blend(r) Moderate will offset losses from the drop in Pro-blend(r) Moderate's long position.| Lifestyle vs. Vanguard Wellesley Income | Lifestyle vs. HUMANA INC | Lifestyle vs. Aquagold International | Lifestyle vs. Barloworld Ltd ADR |
| Pro-blend(r) Moderate vs. Vanguard Wellesley Income | Pro-blend(r) Moderate vs. HUMANA INC | Pro-blend(r) Moderate vs. Aquagold International | Pro-blend(r) Moderate vs. Barloworld Ltd ADR |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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