Correlation Between The Brown and Cohen Steers

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

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

Diversification Opportunities for The Brown and Cohen Steers

0.4

Correlation Coefficient

The Brown  Cohen Steers

Very weak diversification

The 3 months correlation between The and Cohen is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding The Brown Capital and Cohen Steers Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Steers Real and The Brown 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 The Brown Capital 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 Real has no effect on the direction of The Brown i.e., The Brown and Cohen Steers go up and down completely randomly.

Pair Corralation between The Brown and Cohen Steers

Assuming the 90 days horizon The Brown Capital is expected to under-perform the Cohen Steers. In addition to that, The Brown is 4.68 times more volatile than Cohen Steers Real. It trades about -0.16 of its total potential returns per unit of risk. Cohen Steers Real is currently generating about -0.01 per unit of volatility. If you would invest  1,854  in Cohen Steers Real on December 4, 2024 and sell it today you would lose (21.00) from holding Cohen Steers Real or give up 1.13% of portfolio value over 90 days.

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

The Brown Capital  vs.  Cohen Steers Real

Brown Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Brown Capital has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Cohen Steers Real

Risk-Adjusted Performance

Very Weak

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

Pair Trading with The Brown and Cohen Steers

The main advantage of trading using opposite The Brown and Cohen Steers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Brown 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 The Brown Capital and Cohen Steers Real 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.