Correlation Between Pekin Life and CREF Inflation
Can any of the company-specific risk be diversified away by investing in both Pekin Life and CREF Inflation 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 Pekin Life and CREF Inflation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pekin Life Insurance and CREF Inflation Linked Bond, you can compare the effects of market volatilities on Pekin Life and CREF Inflation 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 Pekin Life with a short position of CREF Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pekin Life and CREF Inflation.
Diversification Opportunities for Pekin Life and CREF Inflation
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pekin and CREF is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Pekin Life Insurance and CREF Inflation Linked Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CREF Inflation Linked and Pekin Life 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 Pekin Life Insurance are associated (or correlated) with CREF Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CREF Inflation Linked has no effect on the direction of Pekin Life i.e., Pekin Life and CREF Inflation go up and down completely randomly.
Pair Corralation between Pekin Life and CREF Inflation
Given the investment horizon of 90 days Pekin Life is expected to generate 1.11 times less return on investment than CREF Inflation. In addition to that, Pekin Life is 6.72 times more volatile than CREF Inflation Linked Bond. It trades about 0.01 of its total potential returns per unit of risk. CREF Inflation Linked Bond is currently generating about 0.06 per unit of volatility. If you would invest 7,867 in CREF Inflation Linked Bond on September 5, 2024 and sell it today you would earn a total of 634.00 from holding CREF Inflation Linked Bond or generate 8.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.19% |
| Values | Daily Returns |
Pekin Life Insurance vs. CREF Inflation Linked Bond
Performance |
| Timeline |
| Pekin Life Insurance |
| CREF Inflation Linked |
Pekin Life and CREF Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pekin Life and CREF Inflation
The main advantage of trading using opposite Pekin Life and CREF Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pekin Life position performs unexpectedly, CREF Inflation 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 CREF Inflation will offset losses from the drop in CREF Inflation's long position.| Pekin Life vs. Western Asset Global | Pekin Life vs. Invesco Trust For | Pekin Life vs. Logan Ridge Finance | Pekin Life vs. Invesco Advantage MIT |
| CREF Inflation vs. Pekin Life Insurance | CREF Inflation vs. Highway Holdings Limited | CREF Inflation vs. Hurco Companies | CREF Inflation vs. The Hanover Insurance |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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