Correlation Between Cap ISR and CM AM

Can any of the company-specific risk be diversified away by investing in both Cap ISR and CM AM 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 Cap ISR and CM AM into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cap ISR Actions and CM AM Monplus NE, you can compare the effects of market volatilities on Cap ISR and CM AM 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 Cap ISR with a short position of CM AM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cap ISR and CM AM.

Diversification Opportunities for Cap ISR and CM AM

-0.66

Correlation Coefficient

Cap ISR  CM AM

Excellent diversification

The 3 months correlation between Cap and 0P0001F96C is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Cap ISR Actions and CM AM Monplus NE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CM AM Monplus and Cap ISR 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 Cap ISR Actions are associated (or correlated) with CM AM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CM AM Monplus has no effect on the direction of Cap ISR i.e., Cap ISR and CM AM go up and down completely randomly.

Pair Corralation between Cap ISR and CM AM

Assuming the 90 days trading horizon Cap ISR Actions is expected to under-perform the CM AM. In addition to that, Cap ISR is 66.55 times more volatile than CM AM Monplus NE. It trades about -0.1 of its total potential returns per unit of risk. CM AM Monplus NE is currently generating about 1.39 per unit of volatility. If you would invest  10,554  in CM AM Monplus NE on October 4, 2024 and sell it today you would earn a total of  82.00  from holding CM AM Monplus NE or generate 0.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Cap ISR Actions  vs.  CM AM Monplus NE

Cap ISR Actions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cap ISR Actions has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Cap ISR is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

CM AM Monplus

Risk-Adjusted Performance

96 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in CM AM Monplus NE are ranked lower than 96 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable basic indicators, CM AM is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cap ISR and CM AM

The main advantage of trading using opposite Cap ISR and CM AM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cap ISR position performs unexpectedly, CM AM 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 CM AM will offset losses from the drop in CM AM's long position.

The idea behind Cap ISR Actions and CM AM Monplus NE 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.