Correlation Between Cornerstone Strategic and INSI

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

By analyzing existing cross correlation between Cornerstone Strategic Value and INSI, you can compare the effects of market volatilities on Cornerstone Strategic and INSI 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 Cornerstone Strategic with a short position of INSI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornerstone Strategic and INSI.

Diversification Opportunities for Cornerstone Strategic and INSI

0.05

Correlation Coefficient

Cornerstone Strategic  INSI

Significant diversification

The 3 months correlation between Cornerstone and INSI is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Cornerstone Strategic Value and INSI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INSI and Cornerstone Strategic 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 Cornerstone Strategic Value are associated (or correlated) with INSI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INSI has no effect on the direction of Cornerstone Strategic i.e., Cornerstone Strategic and INSI go up and down completely randomly.

Pair Corralation between Cornerstone Strategic and INSI

Considering the 90-day investment horizon Cornerstone Strategic Value is expected to under-perform the INSI. But the fund apears to be less risky and, when comparing its historical volatility, Cornerstone Strategic Value is 151.69 times less risky than INSI. The fund trades about -0.1 of its potential returns per unit of risk. The INSI is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  13.00  in INSI on December 30, 2024 and sell it today you would earn a total of  1,610  from holding INSI or generate 12384.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	32.26%
Values	Daily Returns

Cornerstone Strategic Value  vs.  INSI

Cornerstone Strategic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cornerstone Strategic Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the fund investors.

INSI

Risk-Adjusted Performance

Solid

Over the last 90 days INSI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly fragile basic indicators, INSI demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cornerstone Strategic and INSI

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

The idea behind Cornerstone Strategic Value and INSI 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.