Correlation Between SPACE and Inflation-adjusted

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

By analyzing existing cross correlation between SPACE and Inflation Adjusted Bond Fund, you can compare the effects of market volatilities on SPACE and Inflation-adjusted 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 SPACE with a short position of Inflation-adjusted. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPACE and Inflation-adjusted.

Diversification Opportunities for SPACE and Inflation-adjusted

-0.15

Correlation Coefficient

SPACE  Inflation-adjusted

Good diversification

The 3 months correlation between SPACE and Inflation-adjusted is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding SPACE and Inflation Adjusted Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflation Adjusted Bond and SPACE 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 SPACE are associated (or correlated) with Inflation-adjusted. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflation Adjusted Bond has no effect on the direction of SPACE i.e., SPACE and Inflation-adjusted go up and down completely randomly.

Pair Corralation between SPACE and Inflation-adjusted

Assuming the 90 days horizon SPACE is expected to generate 16.47 times more return on investment than Inflation-adjusted. However, SPACE is 16.47 times more volatile than Inflation Adjusted Bond Fund. It trades about 0.1 of its potential returns per unit of risk. Inflation Adjusted Bond Fund is currently generating about -0.18 per unit of risk. If you would invest  36.00  in SPACE on October 5, 2024 and sell it today you would earn a total of  11.00  from holding SPACE or generate 30.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

SPACE  vs.  Inflation Adjusted Bond Fund

SPACE

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPACE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, SPACE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Inflation Adjusted Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SPACE and Inflation-adjusted

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

The idea behind SPACE and Inflation Adjusted Bond Fund 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.