Correlation Between Cornerstone Moderately and Capital Growth

Can any of the company-specific risk be diversified away by investing in both Cornerstone Moderately and Capital Growth 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 Cornerstone Moderately and Capital Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cornerstone Moderately Aggressive and Capital Growth Fund, you can compare the effects of market volatilities on Cornerstone Moderately and Capital Growth 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 Cornerstone Moderately with a short position of Capital Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornerstone Moderately and Capital Growth.

Diversification Opportunities for Cornerstone Moderately and Capital Growth

0.99

Correlation Coefficient

Cornerstone Moderately  Capital Growth

No risk reduction

The 3 months correlation between Cornerstone and Capital is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Cornerstone Moderately Aggress and Capital Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Growth and Cornerstone Moderately 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 Cornerstone Moderately Aggressive are associated (or correlated) with Capital Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Growth has no effect on the direction of Cornerstone Moderately i.e., Cornerstone Moderately and Capital Growth go up and down completely randomly.

Pair Corralation between Cornerstone Moderately and Capital Growth

Assuming the 90 days horizon Cornerstone Moderately Aggressive is expected to generate 0.59 times more return on investment than Capital Growth. However, Cornerstone Moderately Aggressive is 1.69 times less risky than Capital Growth. It trades about -0.34 of its potential returns per unit of risk. Capital Growth Fund is currently generating about -0.3 per unit of risk. If you would invest  2,878  in Cornerstone Moderately Aggressive on October 9, 2024 and sell it today you would lose (268.00) from holding Cornerstone Moderately Aggressive or give up 9.31% of portfolio value over 90 days.

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

Cornerstone Moderately Aggress  vs.  Capital Growth Fund

Cornerstone Moderately

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cornerstone Moderately Aggressive has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Capital Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capital Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Cornerstone Moderately and Capital Growth

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

The idea behind Cornerstone Moderately Aggressive and Capital Growth Fund 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.