Correlation Between Morningstar Unconstrained and CIB Marine

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

By analyzing existing cross correlation between Morningstar Unconstrained Allocation and CIB Marine Bancshares, you can compare the effects of market volatilities on Morningstar Unconstrained and CIB Marine 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 Morningstar Unconstrained with a short position of CIB Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morningstar Unconstrained and CIB Marine.

Diversification Opportunities for Morningstar Unconstrained and CIB Marine

0.26

Correlation Coefficient

Morningstar Unconstrained  CIB Marine

Modest diversification

The 3 months correlation between Morningstar and CIB is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Morningstar Unconstrained Allo and CIB Marine Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIB Marine Bancshares and Morningstar Unconstrained 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 Morningstar Unconstrained Allocation are associated (or correlated) with CIB Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIB Marine Bancshares has no effect on the direction of Morningstar Unconstrained i.e., Morningstar Unconstrained and CIB Marine go up and down completely randomly.

Pair Corralation between Morningstar Unconstrained and CIB Marine

Assuming the 90 days horizon Morningstar Unconstrained Allocation is expected to generate 0.31 times more return on investment than CIB Marine. However, Morningstar Unconstrained Allocation is 3.23 times less risky than CIB Marine. It trades about 0.18 of its potential returns per unit of risk. CIB Marine Bancshares is currently generating about -0.16 per unit of risk. If you would invest  1,171  in Morningstar Unconstrained Allocation on September 14, 2024 and sell it today you would earn a total of  19.00  from holding Morningstar Unconstrained Allocation or generate 1.62% return on investment over 90 days.

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

Morningstar Unconstrained Allo  vs.  CIB Marine Bancshares

Morningstar Unconstrained

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morningstar Unconstrained Allocation are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Morningstar Unconstrained is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

CIB Marine Bancshares

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CIB Marine Bancshares are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile fundamental drivers, CIB Marine demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Morningstar Unconstrained and CIB Marine

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

The idea behind Morningstar Unconstrained Allocation and CIB Marine Bancshares 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..