Correlation Between Redwood Systematic and Upright Assets
Can any of the company-specific risk be diversified away by investing in both Redwood Systematic and Upright Assets 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 Upright Assets 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 Upright Assets Allocation, you can compare the effects of market volatilities on Redwood Systematic and Upright Assets 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 Upright Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Redwood Systematic and Upright Assets.
Diversification Opportunities for Redwood Systematic and Upright Assets
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Redwood and Upright is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Redwood Systematic Macro and Upright Assets Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Upright Assets Allocation 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 Upright Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Upright Assets Allocation has no effect on the direction of Redwood Systematic i.e., Redwood Systematic and Upright Assets go up and down completely randomly.
Pair Corralation between Redwood Systematic and Upright Assets
Assuming the 90 days horizon Redwood Systematic Macro is expected to generate 0.25 times more return on investment than Upright Assets. However, Redwood Systematic Macro is 4.03 times less risky than Upright Assets. It trades about -0.35 of its potential returns per unit of risk. Upright Assets Allocation is currently generating about -0.15 per unit of risk. If you would invest 1,666 in Redwood Systematic Macro on January 16, 2025 and sell it today you would lose (172.00) from holding Redwood Systematic Macro or give up 10.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Redwood Systematic Macro vs. Upright Assets Allocation
Performance |
| Timeline |
| Redwood Systematic Macro |
| Upright Assets Allocation |
Redwood Systematic and Upright Assets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Redwood Systematic and Upright Assets
The main advantage of trading using opposite Redwood Systematic and Upright Assets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Redwood Systematic position performs unexpectedly, Upright Assets 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 Upright Assets will offset losses from the drop in Upright Assets' long position.| Redwood Systematic vs. The Hartford Global | Redwood Systematic vs. Dreyfusstandish Global Fixed | Redwood Systematic vs. Ms Global Fixed | Redwood Systematic vs. Templeton Global Balanced |
| Upright Assets vs. All Asset Fund | Upright Assets vs. Pimco All Asset | Upright Assets vs. All Asset Fund | Upright Assets vs. Pimco All Asset |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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