Correlation Between Cref Inflation-linked and Global Strategist

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

By analyzing existing cross correlation between Cref Inflation Linked Bond and Global Strategist Portfolio, you can compare the effects of market volatilities on Cref Inflation-linked and Global Strategist 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 Cref Inflation-linked with a short position of Global Strategist. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cref Inflation-linked and Global Strategist.

Diversification Opportunities for Cref Inflation-linked and Global Strategist

0.77

Correlation Coefficient

Cref Inflation-linked  Global Strategist

Poor diversification

The 3 months correlation between Cref and Global is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Cref Inflation Linked Bond and Global Strategist Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Strategist and Cref Inflation-linked 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 Cref Inflation Linked Bond are associated (or correlated) with Global Strategist. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Strategist has no effect on the direction of Cref Inflation-linked i.e., Cref Inflation-linked and Global Strategist go up and down completely randomly.

Pair Corralation between Cref Inflation-linked and Global Strategist

Assuming the 90 days trading horizon Cref Inflation-linked is expected to generate 1.42 times less return on investment than Global Strategist. But when comparing it to its historical volatility, Cref Inflation Linked Bond is 3.2 times less risky than Global Strategist. It trades about 0.26 of its potential returns per unit of risk. Global Strategist Portfolio is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,682  in Global Strategist Portfolio on October 23, 2024 and sell it today you would earn a total of  21.00  from holding Global Strategist Portfolio or generate 1.25% return on investment over 90 days.

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

Cref Inflation Linked Bond  vs.  Global Strategist Portfolio

Cref Inflation Linked

Risk-Adjusted Performance

0 of 100

Very Weak

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

Global Strategist

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Cref Inflation-linked and Global Strategist

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

The idea behind Cref Inflation Linked Bond and Global Strategist Portfolio 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.