Correlation Between Strategic Allocation: and One Choice

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

By analyzing existing cross correlation between Strategic Allocation Aggressive and One Choice 2030, you can compare the effects of market volatilities on Strategic Allocation: and One Choice 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 One Choice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Allocation: and One Choice.

Diversification Opportunities for Strategic Allocation: and One Choice

0.8

Correlation Coefficient

Strategic Allocation:  One Choice

Very poor diversification

The 3 months correlation between Strategic and One is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Allocation Aggressiv and One Choice 2030 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Choice 2030 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 Aggressive are associated (or correlated) with One Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Choice 2030 has no effect on the direction of Strategic Allocation: i.e., Strategic Allocation: and One Choice go up and down completely randomly.

Pair Corralation between Strategic Allocation: and One Choice

Assuming the 90 days horizon Strategic Allocation Aggressive is expected to generate 1.44 times more return on investment than One Choice. However, Strategic Allocation: is 1.44 times more volatile than One Choice 2030. It trades about 0.1 of its potential returns per unit of risk. One Choice 2030 is currently generating about 0.09 per unit of risk. If you would invest  708.00  in Strategic Allocation Aggressive on September 7, 2024 and sell it today you would earn a total of  169.00  from holding Strategic Allocation Aggressive or generate 23.87% return on investment over 90 days.

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

Strategic Allocation Aggressiv  vs.  One Choice 2030

Strategic Allocation:

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Allocation Aggressive are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Strategic Allocation: may actually be approaching a critical reversion point that can send shares even higher in January 2025.

One Choice 2030

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in One Choice 2030 are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, One Choice 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 One Choice

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

The idea behind Strategic Allocation Aggressive and One Choice 2030 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.