Correlation Between Rational Defensive and Hanlon Tactical

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

Diversification Opportunities for Rational Defensive and Hanlon Tactical

0.75

Correlation Coefficient

Rational Defensive  Hanlon Tactical

Poor diversification

The 3 months correlation between Rational and Hanlon is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Rational Defensive Growth and Hanlon Tactical Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanlon Tactical Dividend 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 Hanlon Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanlon Tactical Dividend has no effect on the direction of Rational Defensive i.e., Rational Defensive and Hanlon Tactical go up and down completely randomly.

Pair Corralation between Rational Defensive and Hanlon Tactical

Assuming the 90 days horizon Rational Defensive Growth is expected to under-perform the Hanlon Tactical. In addition to that, Rational Defensive is 1.13 times more volatile than Hanlon Tactical Dividend. It trades about -0.15 of its total potential returns per unit of risk. Hanlon Tactical Dividend is currently generating about -0.13 per unit of volatility. If you would invest  1,286  in Hanlon Tactical Dividend on October 8, 2024 and sell it today you would lose (31.00) from holding Hanlon Tactical Dividend or give up 2.41% of portfolio value over 90 days.

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

Rational Defensive Growth  vs.  Hanlon Tactical Dividend

Rational Defensive Growth

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rational Defensive Growth are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Rational Defensive may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Hanlon Tactical Dividend

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hanlon Tactical Dividend are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Hanlon Tactical 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 Hanlon Tactical

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

The idea behind Rational Defensive Growth and Hanlon Tactical Dividend 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.