Correlation Between Rational/pier and Global Growth

Can any of the company-specific risk be diversified away by investing in both Rational/pier and Global Growth 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/pier and Global Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rationalpier 88 Convertible and Global Growth Fund, you can compare the effects of market volatilities on Rational/pier and Global Growth 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/pier with a short position of Global Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rational/pier and Global Growth.

Diversification Opportunities for Rational/pier and Global Growth

0.54

Correlation Coefficient

Rational/pier  Global Growth

Very weak diversification

The 3 months correlation between Rational/pier and Global is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Rationalpier 88 Convertible and Global Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Growth and Rational/pier 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 Rationalpier 88 Convertible are associated (or correlated) with Global Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Growth has no effect on the direction of Rational/pier i.e., Rational/pier and Global Growth go up and down completely randomly.

Pair Corralation between Rational/pier and Global Growth

Assuming the 90 days horizon Rational/pier is expected to generate 3.96 times less return on investment than Global Growth. But when comparing it to its historical volatility, Rationalpier 88 Convertible is 1.99 times less risky than Global Growth. It trades about 0.1 of its potential returns per unit of risk. Global Growth Fund is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  649.00  in Global Growth Fund on October 25, 2024 and sell it today you would earn a total of  22.00  from holding Global Growth Fund or generate 3.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

Rationalpier 88 Convertible  vs.  Global Growth Fund

Rationalpier 88 Conv

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rationalpier 88 Convertible are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Rational/pier is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Global Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Rational/pier and Global Growth

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

The idea behind Rationalpier 88 Convertible and Global Growth 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.