Correlation Between Income Growth and Cohen Steers

Can any of the company-specific risk be diversified away by investing in both Income Growth and Cohen Steers 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 Income Growth and Cohen Steers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Income Growth Fund and Cohen Steers Reit, you can compare the effects of market volatilities on Income Growth and Cohen Steers 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 Income Growth with a short position of Cohen Steers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Income Growth and Cohen Steers.

Diversification Opportunities for Income Growth and Cohen Steers

0.08

Correlation Coefficient

Income Growth  Cohen Steers

Significant diversification

The 3 months correlation between Income and Cohen is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Income Growth Fund and Cohen Steers Reit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Steers Reit and Income Growth 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 Income Growth Fund are associated (or correlated) with Cohen Steers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Steers Reit has no effect on the direction of Income Growth i.e., Income Growth and Cohen Steers go up and down completely randomly.

Pair Corralation between Income Growth and Cohen Steers

Assuming the 90 days horizon Income Growth Fund is expected to under-perform the Cohen Steers. But the mutual fund apears to be less risky and, when comparing its historical volatility, Income Growth Fund is 1.1 times less risky than Cohen Steers. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Cohen Steers Reit is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,039  in Cohen Steers Reit on December 28, 2024 and sell it today you would earn a total of  138.00  from holding Cohen Steers Reit or generate 6.77% return on investment over 90 days.

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

Income Growth Fund  vs.  Cohen Steers Reit

Income Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Income Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Income Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cohen Steers Reit

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cohen Steers Reit are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively fragile basic indicators, Cohen Steers may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Income Growth and Cohen Steers

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

The idea behind Income Growth Fund and Cohen Steers Reit 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.