Correlation Between Redwood Systematic and Sp 500
Can any of the company-specific risk be diversified away by investing in both Redwood Systematic and Sp 500 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 Sp 500 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 Sp 500 Equal, you can compare the effects of market volatilities on Redwood Systematic and Sp 500 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 Sp 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Redwood Systematic and Sp 500.
Diversification Opportunities for Redwood Systematic and Sp 500
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Redwood and INDEX is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Redwood Systematic Macro and Sp 500 Equal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp 500 Equal 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 Sp 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp 500 Equal has no effect on the direction of Redwood Systematic i.e., Redwood Systematic and Sp 500 go up and down completely randomly.
Pair Corralation between Redwood Systematic and Sp 500
Assuming the 90 days horizon Redwood Systematic Macro is expected to generate 1.07 times more return on investment than Sp 500. However, Redwood Systematic is 1.07 times more volatile than Sp 500 Equal. It trades about 0.21 of its potential returns per unit of risk. Sp 500 Equal is currently generating about 0.18 per unit of risk. If you would invest 1,895 in Redwood Systematic Macro on August 29, 2024 and sell it today you would earn a total of 83.00 from holding Redwood Systematic Macro or generate 4.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Redwood Systematic Macro vs. Sp 500 Equal
Performance |
| Timeline |
| Redwood Systematic Macro |
| Sp 500 Equal |
Redwood Systematic and Sp 500 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Redwood Systematic and Sp 500
The main advantage of trading using opposite Redwood Systematic and Sp 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Redwood Systematic position performs unexpectedly, Sp 500 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 Sp 500 will offset losses from the drop in Sp 500's long position.| Redwood Systematic vs. Western Asset Diversified | Redwood Systematic vs. Pioneer Diversified High | Redwood Systematic vs. Adams Diversified Equity | Redwood Systematic vs. Massmutual Premier Diversified |
| Sp 500 vs. Europac Gold Fund | Sp 500 vs. Fidelity Advisor Gold | Sp 500 vs. James Balanced Golden | Sp 500 vs. Global Gold Fund |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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