Correlation Between Redwood Systematic and American Independence
Can any of the company-specific risk be diversified away by investing in both Redwood Systematic and American Independence 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 Redwood Systematic and American Independence into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Redwood Systematic Macro and American Independence Kansas, you can compare the effects of market volatilities on Redwood Systematic and American Independence 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 Redwood Systematic with a short position of American Independence. Check out your portfolio center. Please also check ongoing floating volatility patterns of Redwood Systematic and American Independence.
Diversification Opportunities for Redwood Systematic and American Independence
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Redwood and American is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Redwood Systematic Macro and American Independence Kansas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Independence and Redwood Systematic 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 Redwood Systematic Macro are associated (or correlated) with American Independence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Independence has no effect on the direction of Redwood Systematic i.e., Redwood Systematic and American Independence go up and down completely randomly.
Pair Corralation between Redwood Systematic and American Independence
Assuming the 90 days horizon Redwood Systematic Macro is expected to generate 3.74 times more return on investment than American Independence. However, Redwood Systematic is 3.74 times more volatile than American Independence Kansas. It trades about 0.32 of its potential returns per unit of risk. American Independence Kansas is currently generating about 0.22 per unit of risk. If you would invest 1,871 in Redwood Systematic Macro on September 1, 2024 and sell it today you would earn a total of 115.00 from holding Redwood Systematic Macro or generate 6.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Redwood Systematic Macro vs. American Independence Kansas
Performance |
| Timeline |
| Redwood Systematic Macro |
| American Independence |
Redwood Systematic and American Independence Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Redwood Systematic and American Independence
The main advantage of trading using opposite Redwood Systematic and American Independence positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Redwood Systematic position performs unexpectedly, American Independence 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 American Independence will offset losses from the drop in American Independence's long position.| Redwood Systematic vs. Redwood Managed Volatility | Redwood Systematic vs. Redwood Managed Volatility | Redwood Systematic vs. Redwood Managed Volatility | Redwood Systematic vs. Redwood Alphafactor Tactical |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |