Correlation Between Sierra Core and Leader Total

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

By analyzing existing cross correlation between Sierra E Retirement and Leader Total Return, you can compare the effects of market volatilities on Sierra Core and Leader Total 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 Sierra Core with a short position of Leader Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sierra Core and Leader Total.

Diversification Opportunities for Sierra Core and Leader Total

-0.13

Correlation Coefficient

Sierra Core  Leader Total

Good diversification

The 3 months correlation between Sierra and Leader is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Sierra E Retirement and Leader Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leader Total Return and Sierra Core 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 Sierra E Retirement are associated (or correlated) with Leader Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leader Total Return has no effect on the direction of Sierra Core i.e., Sierra Core and Leader Total go up and down completely randomly.

Pair Corralation between Sierra Core and Leader Total

Assuming the 90 days horizon Sierra E Retirement is expected to under-perform the Leader Total. In addition to that, Sierra Core is 3.43 times more volatile than Leader Total Return. It trades about -0.05 of its total potential returns per unit of risk. Leader Total Return is currently generating about 0.23 per unit of volatility. If you would invest  1,098  in Leader Total Return on December 21, 2024 and sell it today you would earn a total of  18.00  from holding Leader Total Return or generate 1.64% return on investment over 90 days.

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

Sierra E Retirement  vs.  Leader Total Return

Sierra E Retirement

Risk-Adjusted Performance

Very Weak

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

Leader Total Return

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Leader Total Return are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Leader Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sierra Core and Leader Total

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

The idea behind Sierra E Retirement and Leader Total Return 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.