Correlation Between Moderate Balanced and Cliffwater Corporate

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

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

Diversification Opportunities for Moderate Balanced and Cliffwater Corporate

-0.27

Correlation Coefficient

Moderate Balanced  Cliffwater Corporate

Very good diversification

The 3 months correlation between MODERATE and Cliffwater is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Moderate Balanced 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 Moderate Balanced 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 Moderate Balanced 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 Moderate Balanced i.e., Moderate Balanced and Cliffwater Corporate go up and down completely randomly.

Pair Corralation between Moderate Balanced and Cliffwater Corporate

Assuming the 90 days horizon Moderate Balanced Allocation is expected to generate 12.26 times more return on investment than Cliffwater Corporate. However, Moderate Balanced is 12.26 times more volatile than Cliffwater Corporate Lending. It trades about 0.16 of its potential returns per unit of risk. Cliffwater Corporate Lending is currently generating about 0.97 per unit of risk. If you would invest  1,184  in Moderate Balanced Allocation on October 25, 2024 and sell it today you would earn a total of  20.00  from holding Moderate Balanced Allocation or generate 1.69% return on investment over 90 days.

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

Moderate Balanced Allocation  vs.  Cliffwater Corporate Lending

Moderate Balanced

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Moderate Balanced Allocation are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Moderate Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cliffwater Corporate

Risk-Adjusted Performance

64 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Cliffwater Corporate Lending are ranked lower than 64 (%) 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 Moderate Balanced and Cliffwater Corporate

The main advantage of trading using opposite Moderate Balanced and Cliffwater Corporate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moderate Balanced 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 Moderate Balanced 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.