Correlation Between Rational Defensive and Ishares Msci

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

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

Diversification Opportunities for Rational Defensive and Ishares Msci

-0.29

Correlation Coefficient

Rational Defensive  Ishares Msci

Very good diversification

The 3 months correlation between Rational and Ishares is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Rational Defensive Growth and Ishares Msci Eafe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ishares Msci Eafe and Rational Defensive 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 Rational Defensive Growth are associated (or correlated) with Ishares Msci. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ishares Msci Eafe has no effect on the direction of Rational Defensive i.e., Rational Defensive and Ishares Msci go up and down completely randomly.

Pair Corralation between Rational Defensive and Ishares Msci

Assuming the 90 days horizon Rational Defensive Growth is expected to under-perform the Ishares Msci. In addition to that, Rational Defensive is 1.46 times more volatile than Ishares Msci Eafe. It trades about -0.1 of its total potential returns per unit of risk. Ishares Msci Eafe is currently generating about 0.2 per unit of volatility. If you would invest  1,527  in Ishares Msci Eafe on December 23, 2024 and sell it today you would earn a total of  162.00  from holding Ishares Msci Eafe or generate 10.61% return on investment over 90 days.

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

Rational Defensive Growth  vs.  Ishares Msci Eafe

Rational Defensive Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rational Defensive Growth 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.

Ishares Msci Eafe

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ishares Msci Eafe are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Ishares Msci may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Rational Defensive and Ishares Msci

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

The idea behind Rational Defensive Growth and Ishares Msci Eafe 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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