Correlation Between Real Assets and Global Core
Can any of the company-specific risk be diversified away by investing in both Real Assets and Global Core 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 Real Assets and Global Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Real Assets Portfolio and Global E Portfolio, you can compare the effects of market volatilities on Real Assets and Global Core 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 Real Assets with a short position of Global Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Real Assets and Global Core.
Diversification Opportunities for Real Assets and Global Core
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Real and Global is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Real Assets Portfolio and Global E Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global E Portfolio and Real Assets 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 Real Assets Portfolio are associated (or correlated) with Global Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global E Portfolio has no effect on the direction of Real Assets i.e., Real Assets and Global Core go up and down completely randomly.
Pair Corralation between Real Assets and Global Core
Assuming the 90 days horizon Real Assets is expected to generate 6.45 times less return on investment than Global Core. But when comparing it to its historical volatility, Real Assets Portfolio is 2.6 times less risky than Global Core. It trades about 0.04 of its potential returns per unit of risk. Global E Portfolio is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,062 in Global E Portfolio on April 2, 2025 and sell it today you would earn a total of 193.00 from holding Global E Portfolio or generate 9.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Real Assets Portfolio vs. Global E Portfolio
Performance |
| Timeline |
| Real Assets Portfolio |
| Global E Portfolio |
Real Assets and Global Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Real Assets and Global Core
The main advantage of trading using opposite Real Assets and Global Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Real Assets position performs unexpectedly, Global Core 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 Global Core will offset losses from the drop in Global Core's long position.| Real Assets vs. Barings Active Short | Real Assets vs. Alpine Ultra Short | Real Assets vs. Cmg Ultra Short | Real Assets vs. Jhancock Short Duration |
| Global Core vs. Putnman Retirement Ready | Global Core vs. Fidelity Managed Retirement | Global Core vs. Qs Moderate Growth | Global Core vs. Strategic Allocation Moderate |
Check out your portfolio center.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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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