Correlation Between Resq Dynamic and Cliffwater Corporate

Can any of the company-specific risk be diversified away by investing in both Resq Dynamic and Cliffwater Corporate 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 Resq Dynamic and Cliffwater Corporate into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Resq Dynamic Allocation and Cliffwater Corporate Lending, you can compare the effects of market volatilities on Resq Dynamic and Cliffwater Corporate 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 Resq Dynamic with a short position of Cliffwater Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Resq Dynamic and Cliffwater Corporate.

Diversification Opportunities for Resq Dynamic and Cliffwater Corporate

0.88

Correlation Coefficient

Resq Dynamic  Cliffwater Corporate

Very poor diversification

The 3 months correlation between Resq and Cliffwater is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Resq Dynamic Allocation and Cliffwater Corporate Lending in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cliffwater Corporate and Resq Dynamic 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 Resq Dynamic Allocation are associated (or correlated) with Cliffwater Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cliffwater Corporate has no effect on the direction of Resq Dynamic i.e., Resq Dynamic and Cliffwater Corporate go up and down completely randomly.

Pair Corralation between Resq Dynamic and Cliffwater Corporate

Assuming the 90 days horizon Resq Dynamic Allocation is expected to generate 14.96 times more return on investment than Cliffwater Corporate. However, Resq Dynamic is 14.96 times more volatile than Cliffwater Corporate Lending. It trades about 0.15 of its potential returns per unit of risk. Cliffwater Corporate Lending is currently generating about 0.79 per unit of risk. If you would invest  1,035  in Resq Dynamic Allocation on September 15, 2024 and sell it today you would earn a total of  26.00  from holding Resq Dynamic Allocation or generate 2.51% return on investment over 90 days.

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

Resq Dynamic Allocation  vs.  Cliffwater Corporate Lending

Resq Dynamic Allocation

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Resq Dynamic Allocation are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Resq Dynamic showed solid returns over the last few months and may actually be approaching a breakup point.

Cliffwater Corporate

Risk-Adjusted Performance

62 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Cliffwater Corporate Lending are ranked lower than 62 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Cliffwater Corporate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Resq Dynamic and Cliffwater Corporate

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

The idea behind Resq Dynamic Allocation and Cliffwater Corporate Lending 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.