Correlation Between Commonwealth Global and Pro-blend(r) Conservative

Can any of the company-specific risk be diversified away by investing in both Commonwealth Global and Pro-blend(r) Conservative 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 Pro-blend(r) Conservative 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 Pro Blend Servative Term, you can compare the effects of market volatilities on Commonwealth Global and Pro-blend(r) Conservative 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 Pro-blend(r) Conservative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Global and Pro-blend(r) Conservative.

Diversification Opportunities for Commonwealth Global and Pro-blend(r) Conservative

0.64

Correlation Coefficient

Commonwealth Global  Pro-blend(r) Conservative

Poor diversification

The 3 months correlation between Commonwealth and Pro-blend(r) is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Global Fund and Pro Blend Servative Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro-blend(r) Conservative 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 Pro-blend(r) Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro-blend(r) Conservative has no effect on the direction of Commonwealth Global i.e., Commonwealth Global and Pro-blend(r) Conservative go up and down completely randomly.

Pair Corralation between Commonwealth Global and Pro-blend(r) Conservative

Assuming the 90 days horizon Commonwealth Global is expected to generate 1.29 times less return on investment than Pro-blend(r) Conservative. In addition to that, Commonwealth Global is 2.2 times more volatile than Pro Blend Servative Term. It trades about 0.07 of its total potential returns per unit of risk. Pro Blend Servative Term is currently generating about 0.2 per unit of volatility. If you would invest  1,289  in Pro Blend Servative Term on December 2, 2024 and sell it today you would earn a total of  31.00  from holding Pro Blend Servative Term or generate 2.4% return on investment over 90 days.

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

Commonwealth Global Fund  vs.  Pro Blend Servative Term

Commonwealth Global

Risk-Adjusted Performance

Very Weak

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

Pro-blend(r) Conservative

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pro Blend Servative Term are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pro-blend(r) Conservative 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 Pro-blend(r) Conservative

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

The idea behind Commonwealth Global Fund and Pro Blend Servative Term 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.