Correlation Between Commonwealth Global and 361 Global

Can any of the company-specific risk be diversified away by investing in both Commonwealth Global and 361 Global 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 Commonwealth Global and 361 Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Commonwealth Global Fund and 361 Global Longshort, you can compare the effects of market volatilities on Commonwealth Global and 361 Global 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 Commonwealth Global with a short position of 361 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Global and 361 Global.

Diversification Opportunities for Commonwealth Global and 361 Global

0.57

Correlation Coefficient

Commonwealth Global  361 Global

Very weak diversification

The 3 months correlation between Commonwealth and 361 is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Global Fund and 361 Global Longshort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 361 Global Longshort and Commonwealth Global 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 Commonwealth Global Fund are associated (or correlated) with 361 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 361 Global Longshort has no effect on the direction of Commonwealth Global i.e., Commonwealth Global and 361 Global go up and down completely randomly.

Pair Corralation between Commonwealth Global and 361 Global

Assuming the 90 days horizon Commonwealth Global Fund is expected to generate 1.7 times more return on investment than 361 Global. However, Commonwealth Global is 1.7 times more volatile than 361 Global Longshort. It trades about 0.06 of its potential returns per unit of risk. 361 Global Longshort is currently generating about 0.04 per unit of risk. If you would invest  2,121  in Commonwealth Global Fund on September 4, 2024 and sell it today you would earn a total of  51.00  from holding Commonwealth Global Fund or generate 2.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Commonwealth Global Fund  vs.  361 Global Longshort

Commonwealth Global

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Commonwealth Global Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Commonwealth Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

361 Global Longshort

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in 361 Global Longshort are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, 361 Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Commonwealth Global and 361 Global

The main advantage of trading using opposite Commonwealth Global and 361 Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Global position performs unexpectedly, 361 Global 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 361 Global will offset losses from the drop in 361 Global's long position.

The idea behind Commonwealth Global Fund and 361 Global Longshort 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.