Correlation Between Preferred Securities and Salient Select
Can any of the company-specific risk be diversified away by investing in both Preferred Securities and Salient Select 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 Preferred Securities and Salient Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Preferred Securities Fund and Salient Select Income, you can compare the effects of market volatilities on Preferred Securities and Salient Select 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 Preferred Securities with a short position of Salient Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Preferred Securities and Salient Select.
Diversification Opportunities for Preferred Securities and Salient Select
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between PREFERRED and Salient is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Preferred Securities Fund and Salient Select Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient Select Income and Preferred Securities 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 Preferred Securities Fund are associated (or correlated) with Salient Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient Select Income has no effect on the direction of Preferred Securities i.e., Preferred Securities and Salient Select go up and down completely randomly.
Pair Corralation between Preferred Securities and Salient Select
Assuming the 90 days horizon Preferred Securities is expected to generate 1.63 times less return on investment than Salient Select. But when comparing it to its historical volatility, Preferred Securities Fund is 1.73 times less risky than Salient Select. It trades about 0.09 of its potential returns per unit of risk. Salient Select Income is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,549 in Salient Select Income on August 30, 2024 and sell it today you would earn a total of 406.00 from holding Salient Select Income or generate 26.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Preferred Securities Fund vs. Salient Select Income
Performance |
| Timeline |
| Preferred Securities |
| Salient Select Income |
Preferred Securities and Salient Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Preferred Securities and Salient Select
The main advantage of trading using opposite Preferred Securities and Salient Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Preferred Securities position performs unexpectedly, Salient Select 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 Salient Select will offset losses from the drop in Salient Select's long position.| Preferred Securities vs. T Rowe Price | Preferred Securities vs. Tax Managed Large Cap | Preferred Securities vs. Fundamental Large Cap | Preferred Securities vs. Old Westbury Large |
| Salient Select vs. Cohen Steers Prfrd | Salient Select vs. Cohen Steers Preferd | Salient Select vs. Cohen Steers Prefrd | Salient Select vs. Cohen Steers Preferred |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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