Correlation Between Sierra E and Arbitrage Credit
Can any of the company-specific risk be diversified away by investing in both Sierra E and Arbitrage Credit 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 Sierra E and Arbitrage Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sierra E Retirement and The Arbitrage Credit, you can compare the effects of market volatilities on Sierra E and Arbitrage Credit 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 Sierra E with a short position of Arbitrage Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sierra E and Arbitrage Credit.
Diversification Opportunities for Sierra E and Arbitrage Credit
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sierra and Arbitrage is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sierra E Retirement and The Arbitrage Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbitrage Credit and Sierra E 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 Sierra E Retirement are associated (or correlated) with Arbitrage Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbitrage Credit has no effect on the direction of Sierra E i.e., Sierra E and Arbitrage Credit go up and down completely randomly.
Pair Corralation between Sierra E and Arbitrage Credit
Assuming the 90 days horizon Sierra E Retirement is expected to generate 3.49 times more return on investment than Arbitrage Credit. However, Sierra E is 3.49 times more volatile than The Arbitrage Credit. It trades about 0.11 of its potential returns per unit of risk. The Arbitrage Credit is currently generating about 0.19 per unit of risk. If you would invest 2,242 in Sierra E Retirement on September 9, 2025 and sell it today you would earn a total of 53.00 from holding Sierra E Retirement or generate 2.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sierra E Retirement vs. The Arbitrage Credit
Performance |
| Timeline |
| Sierra E Retirement |
| Arbitrage Credit |
Sierra E and Arbitrage Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sierra E and Arbitrage Credit
The main advantage of trading using opposite Sierra E and Arbitrage Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sierra E position performs unexpectedly, Arbitrage Credit 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 Arbitrage Credit will offset losses from the drop in Arbitrage Credit's long position.| Sierra E vs. Legg Mason Partners | Sierra E vs. T Rowe Price | Sierra E vs. Needham Aggressive Growth | Sierra E vs. Ab Global Risk |
| Arbitrage Credit vs. Alternative Asset Allocation | Arbitrage Credit vs. Omni Small Cap Value | Arbitrage Credit vs. Aqr Diversified Arbitrage | Arbitrage Credit vs. Scharf Balanced Opportunity |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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