Correlation Between Strategic Allocation and Natixis Sustainable

Can any of the company-specific risk be diversified away by investing in both Strategic Allocation and Natixis Sustainable 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 Strategic Allocation and Natixis Sustainable into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Strategic Allocation and Natixis Sustainable

0.76

Correlation Coefficient

Strategic Allocation  Natixis Sustainable

Poor diversification

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

Pair Corralation between Strategic Allocation and Natixis Sustainable

Assuming the 90 days horizon Strategic Allocation Moderate is expected to under-perform the Natixis Sustainable. In addition to that, Strategic Allocation is 1.43 times more volatile than Natixis Sustainable Future. It trades about -0.33 of its total potential returns per unit of risk. Natixis Sustainable Future is currently generating about -0.14 per unit of volatility. If you would invest  1,394  in Natixis Sustainable Future on September 26, 2024 and sell it today you would lose (28.00) from holding Natixis Sustainable Future or give up 2.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Strategic Allocation Moderate  vs.  Natixis Sustainable Future

Strategic Allocation

Risk-Adjusted Performance

0 of 100

Very Weak

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

Natixis Sustainable

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Natixis Sustainable Future are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking indicators, Natixis Sustainable is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Strategic Allocation and Natixis Sustainable

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

The idea behind Strategic Allocation Moderate and Natixis Sustainable Future 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.