Correlation Between Lifex Inflation and Redwood Real

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

By analyzing existing cross correlation between Lifex Inflation Protected Income and Redwood Real Estate, you can compare the effects of market volatilities on Lifex Inflation and Redwood Real 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 Lifex Inflation with a short position of Redwood Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifex Inflation and Redwood Real.

Diversification Opportunities for Lifex Inflation and Redwood Real

0.75

Correlation Coefficient

Lifex Inflation  Redwood Real

Poor diversification

The 3 months correlation between Lifex and Redwood is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Lifex Inflation Protected Inco and Redwood Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redwood Real Estate and Lifex Inflation 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 Lifex Inflation Protected Income are associated (or correlated) with Redwood Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redwood Real Estate has no effect on the direction of Lifex Inflation i.e., Lifex Inflation and Redwood Real go up and down completely randomly.

Pair Corralation between Lifex Inflation and Redwood Real

If you would invest  1,993  in Lifex Inflation Protected Income on September 17, 2024 and sell it today you would earn a total of  0.00  from holding Lifex Inflation Protected Income or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	35.0%
Values	Daily Returns

Lifex Inflation Protected Inco  vs.  Redwood Real Estate

Lifex Inflation Prot

Risk-Adjusted Performance

0 of 100

Very Weak

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

Redwood Real Estate

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Redwood Real Estate are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Redwood Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lifex Inflation and Redwood Real

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

The idea behind Lifex Inflation Protected Income and Redwood Real Estate 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..