Correlation Between Extended Market and Cohen Steers

Can any of the company-specific risk be diversified away by investing in both Extended Market and Cohen Steers 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 Extended Market and Cohen Steers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Extended Market Index and Cohen Steers Low, you can compare the effects of market volatilities on Extended Market and Cohen Steers 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 Extended Market with a short position of Cohen Steers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extended Market and Cohen Steers.

Diversification Opportunities for Extended Market and Cohen Steers

-0.47

Correlation Coefficient

Extended Market  Cohen Steers

Very good diversification

The 3 months correlation between Extended and Cohen is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Extended Market Index and Cohen Steers Low in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Steers Low and Extended Market 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 Extended Market Index are associated (or correlated) with Cohen Steers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Steers Low has no effect on the direction of Extended Market i.e., Extended Market and Cohen Steers go up and down completely randomly.

Pair Corralation between Extended Market and Cohen Steers

Assuming the 90 days horizon Extended Market Index is expected to under-perform the Cohen Steers. In addition to that, Extended Market is 9.44 times more volatile than Cohen Steers Low. It trades about -0.26 of its total potential returns per unit of risk. Cohen Steers Low is currently generating about 0.16 per unit of volatility. If you would invest  946.00  in Cohen Steers Low on December 2, 2024 and sell it today you would earn a total of  3.00  from holding Cohen Steers Low or generate 0.32% return on investment over 90 days.

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

Extended Market Index  vs.  Cohen Steers Low

Extended Market Index

Risk-Adjusted Performance

Very Weak

Over the last 90 days Extended Market Index 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 forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Cohen Steers Low

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cohen Steers Low are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Cohen Steers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Extended Market and Cohen Steers

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

The idea behind Extended Market Index and Cohen Steers Low 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.