Correlation Between Sierra Core and Lifestyle
Can any of the company-specific risk be diversified away by investing in both Sierra Core and Lifestyle 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 Sierra Core and Lifestyle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sierra E Retirement and Lifestyle Ii Moderate, you can compare the effects of market volatilities on Sierra Core and Lifestyle 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 Sierra Core with a short position of Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sierra Core and Lifestyle.
Diversification Opportunities for Sierra Core and Lifestyle
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sierra and Lifestyle is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Sierra E Retirement and Lifestyle Ii Moderate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifestyle Ii Moderate and Sierra Core 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 Sierra E Retirement are associated (or correlated) with Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifestyle Ii Moderate has no effect on the direction of Sierra Core i.e., Sierra Core and Lifestyle go up and down completely randomly.
Pair Corralation between Sierra Core and Lifestyle
Assuming the 90 days horizon Sierra Core is expected to generate 2.14 times less return on investment than Lifestyle. But when comparing it to its historical volatility, Sierra E Retirement is 1.37 times less risky than Lifestyle. It trades about 0.05 of its potential returns per unit of risk. Lifestyle Ii Moderate is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 941.00 in Lifestyle Ii Moderate on October 20, 2024 and sell it today you would earn a total of 149.00 from holding Lifestyle Ii Moderate or generate 15.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sierra E Retirement vs. Lifestyle Ii Moderate
Performance |
| Timeline |
| Sierra E Retirement |
| Lifestyle Ii Moderate |
Sierra Core and Lifestyle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sierra Core and Lifestyle
The main advantage of trading using opposite Sierra Core and Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sierra Core position performs unexpectedly, Lifestyle 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 Lifestyle will offset losses from the drop in Lifestyle's long position.| Sierra Core vs. Stone Ridge Diversified | Sierra Core vs. Global Diversified Income | Sierra Core vs. Allianzgi Diversified Income | Sierra Core vs. Thrivent Diversified Income |
| Lifestyle vs. Delaware Healthcare Fund | Lifestyle vs. Blackrock Health Sciences | Lifestyle vs. Allianzgi Health Sciences | Lifestyle vs. Live Oak Health |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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