Correlation Between Mutual Of and Cref Inflation-linked
Can any of the company-specific risk be diversified away by investing in both Mutual Of and Cref Inflation-linked 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 Mutual Of and Cref Inflation-linked into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mutual Of America and Cref Inflation Linked Bond, you can compare the effects of market volatilities on Mutual Of and Cref Inflation-linked 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 Mutual Of with a short position of Cref Inflation-linked. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mutual Of and Cref Inflation-linked.
Diversification Opportunities for Mutual Of and Cref Inflation-linked
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mutual and Cref is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Mutual Of America and Cref Inflation Linked Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cref Inflation Linked and Mutual Of 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 Mutual Of America are associated (or correlated) with Cref Inflation-linked. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cref Inflation Linked has no effect on the direction of Mutual Of i.e., Mutual Of and Cref Inflation-linked go up and down completely randomly.
Pair Corralation between Mutual Of and Cref Inflation-linked
Assuming the 90 days horizon Mutual Of America is expected to generate 2.6 times more return on investment than Cref Inflation-linked. However, Mutual Of is 2.6 times more volatile than Cref Inflation Linked Bond. It trades about 0.12 of its potential returns per unit of risk. Cref Inflation Linked Bond is currently generating about 0.19 per unit of risk. If you would invest 1,218 in Mutual Of America on October 27, 2024 and sell it today you would earn a total of 13.00 from holding Mutual Of America or generate 1.07% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Mutual Of America vs. Cref Inflation Linked Bond
Performance |
Timeline |
Mutual Of America |
Cref Inflation Linked |
Mutual Of and Cref Inflation-linked Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mutual Of and Cref Inflation-linked
The main advantage of trading using opposite Mutual Of and Cref Inflation-linked positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mutual Of position performs unexpectedly, Cref Inflation-linked 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 Inflation-linked will offset losses from the drop in Cref Inflation-linked's long position.Mutual Of vs. Calvert International Equity | Mutual Of vs. Dws Equity Sector | Mutual Of vs. Siit Equity Factor | Mutual Of vs. Qs Global Equity |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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