Correlation Between Gateway Equity and Natixis Sustainable

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

By analyzing existing cross correlation between Gateway Equity Call and Natixis Sustainable Future, you can compare the effects of market volatilities on Gateway Equity and Natixis Sustainable 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 Gateway Equity with a short position of Natixis Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gateway Equity and Natixis Sustainable.

Diversification Opportunities for Gateway Equity and Natixis Sustainable

0.85

Correlation Coefficient

Gateway Equity  Natixis Sustainable

Very poor diversification

The 3 months correlation between Gateway and Natixis is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Gateway Equity Call and Natixis Sustainable Future in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natixis Sustainable and Gateway Equity 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 Gateway Equity Call are associated (or correlated) with Natixis Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natixis Sustainable has no effect on the direction of Gateway Equity i.e., Gateway Equity and Natixis Sustainable go up and down completely randomly.

Pair Corralation between Gateway Equity and Natixis Sustainable

Assuming the 90 days horizon Gateway Equity Call is expected to under-perform the Natixis Sustainable. But the mutual fund apears to be less risky and, when comparing its historical volatility, Gateway Equity Call is 1.07 times less risky than Natixis Sustainable. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Natixis Sustainable Future is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,232  in Natixis Sustainable Future on December 30, 2024 and sell it today you would lose (11.00) from holding Natixis Sustainable Future or give up 0.89% of portfolio value over 90 days.

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

Gateway Equity Call  vs.  Natixis Sustainable Future

Gateway Equity Call

Risk-Adjusted Performance

Very Weak

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

Natixis Sustainable

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Gateway Equity and Natixis Sustainable

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

The idea behind Gateway Equity Call and Natixis Sustainable Future 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.