Correlation Between Rainier International and Core Bond

Can any of the company-specific risk be diversified away by investing in both Rainier International and Core Bond 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 Rainier International and Core Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rainier International Discovery and Core Bond Series, you can compare the effects of market volatilities on Rainier International and Core Bond 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 Rainier International with a short position of Core Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rainier International and Core Bond.

Diversification Opportunities for Rainier International and Core Bond

0.76

Correlation Coefficient

Rainier International  Core Bond

Poor diversification

The 3 months correlation between Rainier and Core is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Rainier International Discover and Core Bond Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Bond Series and Rainier International 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 Rainier International Discovery are associated (or correlated) with Core Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Bond Series has no effect on the direction of Rainier International i.e., Rainier International and Core Bond go up and down completely randomly.

Pair Corralation between Rainier International and Core Bond

Assuming the 90 days horizon Rainier International Discovery is expected to generate 2.26 times more return on investment than Core Bond. However, Rainier International is 2.26 times more volatile than Core Bond Series. It trades about 0.0 of its potential returns per unit of risk. Core Bond Series is currently generating about -0.1 per unit of risk. If you would invest  2,398  in Rainier International Discovery on September 12, 2024 and sell it today you would lose (4.00) from holding Rainier International Discovery or give up 0.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Rainier International Discover  vs.  Core Bond Series

Rainier International

Risk-Adjusted Performance

0 of 100

Weak

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

Core Bond Series

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Rainier International and Core Bond

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

The idea behind Rainier International Discovery and Core Bond Series 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.