Correlation Between Cref Inflation-linked and Tglix
Can any of the company-specific risk be diversified away by investing in both Cref Inflation-linked and Tglix 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 Cref Inflation-linked and Tglix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cref Inflation Linked Bond and Tglix, you can compare the effects of market volatilities on Cref Inflation-linked and Tglix 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 Cref Inflation-linked with a short position of Tglix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cref Inflation-linked and Tglix.
Diversification Opportunities for Cref Inflation-linked and Tglix
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between CREF and Tglix is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Cref Inflation Linked Bond and Tglix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tglix and Cref Inflation-linked 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 Cref Inflation Linked Bond are associated (or correlated) with Tglix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tglix has no effect on the direction of Cref Inflation-linked i.e., Cref Inflation-linked and Tglix go up and down completely randomly.
Pair Corralation between Cref Inflation-linked and Tglix
Assuming the 90 days trading horizon Cref Inflation-linked is expected to generate 5.49 times less return on investment than Tglix. But when comparing it to its historical volatility, Cref Inflation Linked Bond is 7.67 times less risky than Tglix. It trades about 0.11 of its potential returns per unit of risk. Tglix is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,102 in Tglix on September 4, 2024 and sell it today you would earn a total of 1,423 from holding Tglix or generate 34.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Cref Inflation Linked Bond vs. Tglix
Performance |
| Timeline |
| Cref Inflation Linked |
| Tglix |
Cref Inflation-linked and Tglix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cref Inflation-linked and Tglix
The main advantage of trading using opposite Cref Inflation-linked and Tglix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cref Inflation-linked position performs unexpectedly, Tglix 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 Tglix will offset losses from the drop in Tglix's long position.| Cref Inflation-linked vs. Vanguard Total Stock | Cref Inflation-linked vs. Vanguard 500 Index | Cref Inflation-linked vs. Vanguard Total Stock | Cref Inflation-linked vs. Vanguard Total Stock |
| Tglix vs. Columbia Real Estate | Tglix vs. Forum Real Estate | Tglix vs. Simt Real Estate | Tglix vs. Virtus Real Estate |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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