Correlation Between Cornerstone Strategic and CBH

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

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

Diversification Opportunities for Cornerstone Strategic and CBH

0.93

Correlation Coefficient

Cornerstone Strategic  CBH

Almost no diversification

The 3 months correlation between Cornerstone and CBH is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Cornerstone Strategic Return and CBH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBH 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 Return are associated (or correlated) with CBH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBH has no effect on the direction of Cornerstone Strategic i.e., Cornerstone Strategic and CBH go up and down completely randomly.

Pair Corralation between Cornerstone Strategic and CBH

Considering the 90-day investment horizon Cornerstone Strategic Return is expected to generate 2.28 times more return on investment than CBH. However, Cornerstone Strategic is 2.28 times more volatile than CBH. It trades about 0.09 of its potential returns per unit of risk. CBH is currently generating about 0.07 per unit of risk. If you would invest  501.00  in Cornerstone Strategic Return on September 18, 2024 and sell it today you would earn a total of  373.00  from holding Cornerstone Strategic Return or generate 74.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	85.25%
Values	Daily Returns

Cornerstone Strategic Return  vs.  CBH

Cornerstone Strategic

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cornerstone Strategic Return are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly unfluctuating basic indicators, Cornerstone Strategic reported solid returns over the last few months and may actually be approaching a breakup point.

CBH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CBH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, CBH is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Cornerstone Strategic and CBH

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

The idea behind Cornerstone Strategic Return and CBH 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 Anywhere module to track or share privately all of your investments from the convenience of any device.