Correlation Between Moderate Balanced and Great Lakes

Can any of the company-specific risk be diversified away by investing in both Moderate Balanced and Great Lakes 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 Great Lakes 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 Great Lakes Bond, you can compare the effects of market volatilities on Moderate Balanced and Great Lakes 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 Great Lakes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moderate Balanced and Great Lakes.

Diversification Opportunities for Moderate Balanced and Great Lakes

0.0

Correlation Coefficient

Moderate Balanced  Great Lakes

Pay attention - limited upside

The 3 months correlation between Moderate and Great is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Moderate Balanced Allocation and Great Lakes Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Lakes Bond 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 Great Lakes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Lakes Bond has no effect on the direction of Moderate Balanced i.e., Moderate Balanced and Great Lakes go up and down completely randomly.

Pair Corralation between Moderate Balanced and Great Lakes

If you would invest  1,184  in Moderate Balanced Allocation on October 24, 2024 and sell it today you would earn a total of  8.00  from holding Moderate Balanced Allocation or generate 0.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Moderate Balanced Allocation  vs.  Great Lakes Bond

Moderate Balanced

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Moderate Balanced Allocation has generated negative risk-adjusted returns adding no value to fund investors. 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.

Great Lakes Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great Lakes Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Great Lakes 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 Great Lakes

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

The idea behind Moderate Balanced Allocation and Great Lakes Bond 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.