Correlation Between Cornerstone Strategic and Leader Total

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

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

Diversification Opportunities for Cornerstone Strategic and Leader Total

0.8

Correlation Coefficient

Cornerstone Strategic  Leader Total

Very poor diversification

The 3 months correlation between Cornerstone and Leader is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Cornerstone Strategic Value 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 Cornerstone Strategic 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 Strategic Value 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 Cornerstone Strategic i.e., Cornerstone Strategic and Leader Total go up and down completely randomly.

Pair Corralation between Cornerstone Strategic and Leader Total

Considering the 90-day investment horizon Cornerstone Strategic Value is expected to generate 14.55 times more return on investment than Leader Total. However, Cornerstone Strategic is 14.55 times more volatile than Leader Total Return. It trades about 0.16 of its potential returns per unit of risk. Leader Total Return is currently generating about 0.13 per unit of risk. If you would invest  727.00  in Cornerstone Strategic Value on September 22, 2024 and sell it today you would earn a total of  114.00  from holding Cornerstone Strategic Value or generate 15.68% return on investment over 90 days.

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

Cornerstone Strategic Value  vs.  Leader Total Return

Cornerstone Strategic

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cornerstone Strategic Value are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of very weak essential indicators, Cornerstone Strategic displayed solid returns over the last few months and may actually be approaching a breakup point.

Leader Total Return

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Leader Total Return are ranked lower than 9 (%) 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 Cornerstone Strategic and Leader Total

The main advantage of trading using opposite Cornerstone Strategic and Leader Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornerstone Strategic 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 Cornerstone Strategic Value 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.