Correlation Between Cabana Target and Fairlead Tactical

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Can any of the company-specific risk be diversified away by investing in both Cabana Target and Fairlead Tactical 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 Cabana Target and Fairlead Tactical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cabana Target Drawdown and Fairlead Tactical Sector, you can compare the effects of market volatilities on Cabana Target and Fairlead Tactical 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 Cabana Target with a short position of Fairlead Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cabana Target and Fairlead Tactical.

Diversification Opportunities for Cabana Target and Fairlead Tactical

CabanaFairleadDiversified AwayCabanaFairleadDiversified Away100%
0.94
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Cabana and Fairlead is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Cabana Target Drawdown and Fairlead Tactical Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairlead Tactical Sector and Cabana Target 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 Cabana Target Drawdown are associated (or correlated) with Fairlead Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fairlead Tactical Sector has no effect on the direction of Cabana Target i.e., Cabana Target and Fairlead Tactical go up and down completely randomly.

Pair Corralation between Cabana Target and Fairlead Tactical

Given the investment horizon of 90 days Cabana Target Drawdown is expected to generate 0.88 times more return on investment than Fairlead Tactical. However, Cabana Target Drawdown is 1.14 times less risky than Fairlead Tactical. It trades about 0.19 of its potential returns per unit of risk. Fairlead Tactical Sector is currently generating about 0.0 per unit of risk. If you would invest  2,194  in Cabana Target Drawdown on November 25, 2024 and sell it today you would earn a total of  36.00  from holding Cabana Target Drawdown or generate 1.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Cabana Target Drawdown  vs.  Fairlead Tactical Sector

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -4-3-2-1012
JavaScript chart by amCharts 3.21.15TDSB TACK
       Timeline  
Cabana Target Drawdown 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Cabana Target Drawdown has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Cabana Target is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb21.621.82222.222.422.6
Fairlead Tactical Sector 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Fairlead Tactical Sector has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Fairlead Tactical is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2727.52828.529

Cabana Target and Fairlead Tactical Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.24-0.91-0.58-0.25-0.01050.210.540.871.21.53 0.51.01.52.02.5
JavaScript chart by amCharts 3.21.15TDSB TACK
       Returns  

Pair Trading with Cabana Target and Fairlead Tactical

The main advantage of trading using opposite Cabana Target and Fairlead Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cabana Target position performs unexpectedly, Fairlead Tactical 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 Fairlead Tactical will offset losses from the drop in Fairlead Tactical's long position.
The idea behind Cabana Target Drawdown and Fairlead Tactical Sector pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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