Correlation Between College Retirement and Moderate Duration
Can any of the company-specific risk be diversified away by investing in both College Retirement and Moderate Duration 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 College Retirement and Moderate Duration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between College Retirement Equities and Moderate Duration Fund, you can compare the effects of market volatilities on College Retirement and Moderate Duration 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 College Retirement with a short position of Moderate Duration. Check out your portfolio center. Please also check ongoing floating volatility patterns of College Retirement and Moderate Duration.
Diversification Opportunities for College Retirement and Moderate Duration
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between College and Moderate is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding College Retirement Equities and Moderate Duration Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moderate Duration and College Retirement 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 College Retirement Equities are associated (or correlated) with Moderate Duration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moderate Duration has no effect on the direction of College Retirement i.e., College Retirement and Moderate Duration go up and down completely randomly.
Pair Corralation between College Retirement and Moderate Duration
Assuming the 90 days trading horizon College Retirement Equities is expected to generate 3.66 times more return on investment than Moderate Duration. However, College Retirement is 3.66 times more volatile than Moderate Duration Fund. It trades about 0.1 of its potential returns per unit of risk. Moderate Duration Fund is currently generating about 0.15 per unit of risk. If you would invest 34,692 in College Retirement Equities on October 25, 2024 and sell it today you would earn a total of 524.00 from holding College Retirement Equities or generate 1.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
College Retirement Equities vs. Moderate Duration Fund
Performance |
| Timeline |
| College Retirement |
| Moderate Duration |
College Retirement and Moderate Duration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with College Retirement and Moderate Duration
The main advantage of trading using opposite College Retirement and Moderate Duration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if College Retirement position performs unexpectedly, Moderate Duration 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 Moderate Duration will offset losses from the drop in Moderate Duration's long position.| College Retirement vs. Ultrasmall Cap Profund Ultrasmall Cap | College Retirement vs. Applied Finance Explorer | College Retirement vs. Mutual Of America | College Retirement vs. Heartland Value Plus |
| Moderate Duration vs. California Bond Fund | Moderate Duration vs. Intermediate Term Tax Free Bond | Moderate Duration vs. Multisector Bond Sma | Moderate Duration vs. T Rowe Price |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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