Correlation Between Rational Defensive and Cref Money

Can any of the company-specific risk be diversified away by investing in both Rational Defensive and Cref Money 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 Cref Money 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 Cref Money Market, you can compare the effects of market volatilities on Rational Defensive and Cref Money 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 Cref Money. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rational Defensive and Cref Money.

Diversification Opportunities for Rational Defensive and Cref Money

0.94

Correlation Coefficient

Rational Defensive  Cref Money

Almost no diversification

The 3 months correlation between Rational and Cref is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Rational Defensive Growth and Cref Money Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cref Money Market 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 Cref Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cref Money Market has no effect on the direction of Rational Defensive i.e., Rational Defensive and Cref Money go up and down completely randomly.

Pair Corralation between Rational Defensive and Cref Money

Assuming the 90 days horizon Rational Defensive Growth is expected to generate 47.67 times more return on investment than Cref Money. However, Rational Defensive is 47.67 times more volatile than Cref Money Market. It trades about 0.27 of its potential returns per unit of risk. Cref Money Market is currently generating about 0.98 per unit of risk. If you would invest  3,623  in Rational Defensive Growth on September 14, 2024 and sell it today you would earn a total of  555.00  from holding Rational Defensive Growth or generate 15.32% return on investment over 90 days.

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

Rational Defensive Growth  vs.  Cref Money Market

Rational Defensive Growth

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rational Defensive Growth are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Rational Defensive showed solid returns over the last few months and may actually be approaching a breakup point.

Cref Money Market

Risk-Adjusted Performance

77 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Cref Money Market are ranked lower than 77 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Cref Money is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rational Defensive and Cref Money

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

The idea behind Rational Defensive Growth and Cref Money Market 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 CEOs Directory module to screen CEOs from public companies around the world.