Correlation Between Destinations Core and Destinations International

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

By analyzing existing cross correlation between Destinations Core Fixed and Destinations International Equity, you can compare the effects of market volatilities on Destinations Core and Destinations International 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 Destinations Core with a short position of Destinations International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Destinations Core and Destinations International.

Diversification Opportunities for Destinations Core and Destinations International

0.74

Correlation Coefficient

Destinations Core  Destinations International

Poor diversification

The 3 months correlation between Destinations and Destinations is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Destinations Core Fixed and Destinations International Equ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Destinations International and Destinations Core 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 Destinations Core Fixed are associated (or correlated) with Destinations International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Destinations International has no effect on the direction of Destinations Core i.e., Destinations Core and Destinations International go up and down completely randomly.

Pair Corralation between Destinations Core and Destinations International

Assuming the 90 days horizon Destinations Core Fixed is expected to generate 0.25 times more return on investment than Destinations International. However, Destinations Core Fixed is 3.99 times less risky than Destinations International. It trades about -0.57 of its potential returns per unit of risk. Destinations International Equity is currently generating about -0.28 per unit of risk. If you would invest  840.00  in Destinations Core Fixed on October 16, 2024 and sell it today you would lose (20.00) from holding Destinations Core Fixed or give up 2.38% of portfolio value over 90 days.

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

Destinations Core Fixed  vs.  Destinations International Equ

Destinations Core Fixed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Destinations Core Fixed has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Destinations Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Destinations International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Destinations International Equity 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 Destinations Core and Destinations International

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

The idea behind Destinations Core Fixed and Destinations International Equity 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.