Correlation Between Cliffwater Corporate and Geneva Smid

Can any of the company-specific risk be diversified away by investing in both Cliffwater Corporate and Geneva Smid 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 Cliffwater Corporate and Geneva Smid into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cliffwater Corporate Lending and Geneva Smid Cap, you can compare the effects of market volatilities on Cliffwater Corporate and Geneva Smid 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 Cliffwater Corporate with a short position of Geneva Smid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cliffwater Corporate and Geneva Smid.

Diversification Opportunities for Cliffwater Corporate and Geneva Smid

-0.56

Correlation Coefficient

Cliffwater Corporate  Geneva Smid

Excellent diversification

The 3 months correlation between Cliffwater and Geneva is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Cliffwater Corporate Lending and Geneva Smid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geneva Smid Cap and Cliffwater Corporate 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 Cliffwater Corporate Lending are associated (or correlated) with Geneva Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geneva Smid Cap has no effect on the direction of Cliffwater Corporate i.e., Cliffwater Corporate and Geneva Smid go up and down completely randomly.

Pair Corralation between Cliffwater Corporate and Geneva Smid

Assuming the 90 days horizon Cliffwater Corporate Lending is expected to generate 0.05 times more return on investment than Geneva Smid. However, Cliffwater Corporate Lending is 22.1 times less risky than Geneva Smid. It trades about 0.85 of its potential returns per unit of risk. Geneva Smid Cap is currently generating about -0.16 per unit of risk. If you would invest  1,054  in Cliffwater Corporate Lending on December 2, 2024 and sell it today you would earn a total of  26.00  from holding Cliffwater Corporate Lending or generate 2.47% return on investment over 90 days.

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

Cliffwater Corporate Lending  vs.  Geneva Smid Cap

Cliffwater Corporate

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Cliffwater Corporate Lending are ranked lower than 67 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Cliffwater Corporate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Geneva Smid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Geneva Smid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Cliffwater Corporate and Geneva Smid

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

The idea behind Cliffwater Corporate Lending and Geneva Smid Cap 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.