Correlation Between Banking Portfolio and Cohen Steers

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

By analyzing existing cross correlation between Banking Portfolio Banking and Cohen Steers Qualityome, you can compare the effects of market volatilities on Banking Portfolio and Cohen Steers 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 Banking Portfolio with a short position of Cohen Steers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banking Portfolio and Cohen Steers.

Diversification Opportunities for Banking Portfolio and Cohen Steers

0.32

Correlation Coefficient

Banking Portfolio  Cohen Steers

Weak diversification

The 3 months correlation between Banking and Cohen is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Banking Portfolio Banking and Cohen Steers Qualityome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Steers Qualityome and Banking Portfolio 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 Banking Portfolio Banking are associated (or correlated) with Cohen Steers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Steers Qualityome has no effect on the direction of Banking Portfolio i.e., Banking Portfolio and Cohen Steers go up and down completely randomly.

Pair Corralation between Banking Portfolio and Cohen Steers

Assuming the 90 days horizon Banking Portfolio Banking is expected to under-perform the Cohen Steers. In addition to that, Banking Portfolio is 1.39 times more volatile than Cohen Steers Qualityome. It trades about -0.04 of its total potential returns per unit of risk. Cohen Steers Qualityome is currently generating about 0.08 per unit of volatility. If you would invest  1,195  in Cohen Steers Qualityome on December 29, 2024 and sell it today you would earn a total of  54.00  from holding Cohen Steers Qualityome or generate 4.52% return on investment over 90 days.

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

Banking Portfolio Banking  vs.  Cohen Steers Qualityome

Banking Portfolio Banking

Risk-Adjusted Performance

Very Weak

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

Cohen Steers Qualityome

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cohen Steers Qualityome are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong basic indicators, Cohen Steers is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Banking Portfolio and Cohen Steers

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

The idea behind Banking Portfolio Banking and Cohen Steers Qualityome 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.