Correlation Between All Asset and Redwood Systematic
Can any of the company-specific risk be diversified away by investing in both All Asset and Redwood Systematic 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 All Asset and Redwood Systematic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between All Asset Fund and Redwood Systematic Macro, you can compare the effects of market volatilities on All Asset and Redwood Systematic 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 All Asset with a short position of Redwood Systematic. Check out your portfolio center. Please also check ongoing floating volatility patterns of All Asset and Redwood Systematic.
Diversification Opportunities for All Asset and Redwood Systematic
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between All and Redwood is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding All Asset Fund and Redwood Systematic Macro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redwood Systematic Macro and All Asset 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 All Asset Fund are associated (or correlated) with Redwood Systematic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redwood Systematic Macro has no effect on the direction of All Asset i.e., All Asset and Redwood Systematic go up and down completely randomly.
Pair Corralation between All Asset and Redwood Systematic
Assuming the 90 days horizon All Asset Fund is expected to generate 0.24 times more return on investment than Redwood Systematic. However, All Asset Fund is 4.09 times less risky than Redwood Systematic. It trades about 0.23 of its potential returns per unit of risk. Redwood Systematic Macro is currently generating about -0.06 per unit of risk. If you would invest 1,082 in All Asset Fund on October 24, 2024 and sell it today you would earn a total of 16.00 from holding All Asset Fund or generate 1.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
All Asset Fund vs. Redwood Systematic Macro
Performance |
| Timeline |
| All Asset Fund |
| Redwood Systematic Macro |
All Asset and Redwood Systematic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with All Asset and Redwood Systematic
The main advantage of trading using opposite All Asset and Redwood Systematic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if All Asset position performs unexpectedly, Redwood Systematic 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 Redwood Systematic will offset losses from the drop in Redwood Systematic's long position.| All Asset vs. Absolute Convertible Arbitrage | All Asset vs. Calamos Dynamic Convertible | All Asset vs. Advent Claymore Convertible | All Asset vs. Lord Abbett Convertible |
| Redwood Systematic vs. Hartford Healthcare Hls | Redwood Systematic vs. Fidelity Advisor Health | Redwood Systematic vs. Blackrock Health Sciences | Redwood Systematic vs. Eventide Healthcare Life |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |