Correlation Between Cref Inflation-linked and Moderate Strategy
Can any of the company-specific risk be diversified away by investing in both Cref Inflation-linked and Moderate Strategy 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 Cref Inflation-linked and Moderate Strategy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cref Inflation Linked Bond and Moderate Strategy Fund, you can compare the effects of market volatilities on Cref Inflation-linked and Moderate Strategy 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 Cref Inflation-linked with a short position of Moderate Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cref Inflation-linked and Moderate Strategy.
Diversification Opportunities for Cref Inflation-linked and Moderate Strategy
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cref and Moderate is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Cref Inflation Linked Bond and Moderate Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moderate Strategy and Cref Inflation-linked 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 Cref Inflation Linked Bond are associated (or correlated) with Moderate Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moderate Strategy has no effect on the direction of Cref Inflation-linked i.e., Cref Inflation-linked and Moderate Strategy go up and down completely randomly.
Pair Corralation between Cref Inflation-linked and Moderate Strategy
Assuming the 90 days trading horizon Cref Inflation-linked is expected to generate 1.98 times less return on investment than Moderate Strategy. But when comparing it to its historical volatility, Cref Inflation Linked Bond is 1.7 times less risky than Moderate Strategy. It trades about 0.22 of its potential returns per unit of risk. Moderate Strategy Fund is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 974.00 in Moderate Strategy Fund on May 30, 2025 and sell it today you would earn a total of 50.00 from holding Moderate Strategy Fund or generate 5.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.41% |
| Values | Daily Returns |
Cref Inflation Linked Bond vs. Moderate Strategy Fund
Performance |
| Timeline |
| Cref Inflation Linked |
| Moderate Strategy |
Cref Inflation-linked and Moderate Strategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cref Inflation-linked and Moderate Strategy
The main advantage of trading using opposite Cref Inflation-linked and Moderate Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cref Inflation-linked position performs unexpectedly, Moderate Strategy 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 Moderate Strategy will offset losses from the drop in Moderate Strategy's long position.| Cref Inflation-linked vs. Gabelli Gold Fund | Cref Inflation-linked vs. Deutsche Gold Precious | Cref Inflation-linked vs. Fidelity Advisor Gold | Cref Inflation-linked vs. Europac Gold Fund |
| Moderate Strategy vs. Qs Large Cap | Moderate Strategy vs. Tax Managed Large Cap | Moderate Strategy vs. Qs Moderate Growth | Moderate Strategy vs. Growth Allocation Fund |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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