Correlation Between James Balanced and Rational Inflation

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

By analyzing existing cross correlation between James Balanced Golden and Rational Inflation Growth, you can compare the effects of market volatilities on James Balanced and Rational Inflation 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 James Balanced with a short position of Rational Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of James Balanced and Rational Inflation.

Diversification Opportunities for James Balanced and Rational Inflation

-0.55

Correlation Coefficient

James Balanced  Rational Inflation

Excellent diversification

The 3 months correlation between James and Rational is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding James Balanced Golden and Rational Inflation Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rational Inflation Growth and James Balanced 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 James Balanced Golden are associated (or correlated) with Rational Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rational Inflation Growth has no effect on the direction of James Balanced i.e., James Balanced and Rational Inflation go up and down completely randomly.

Pair Corralation between James Balanced and Rational Inflation

If you would invest  2,249  in James Balanced Golden on October 25, 2024 and sell it today you would earn a total of  32.00  from holding James Balanced Golden or generate 1.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.56%
Values	Daily Returns

James Balanced Golden  vs.  Rational Inflation Growth

James Balanced Golden

Risk-Adjusted Performance

0 of 100

Very Weak

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

Rational Inflation Growth

Risk-Adjusted Performance

0 of 100

Solid

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

Pair Trading with James Balanced and Rational Inflation

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

The idea behind James Balanced Golden and Rational Inflation Growth 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.