Correlation Between Cornerstone Moderately and Intermediate Government
Can any of the company-specific risk be diversified away by investing in both Cornerstone Moderately and Intermediate Government 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 Moderately and Intermediate Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cornerstone Moderately Aggressive and Intermediate Government Bond, you can compare the effects of market volatilities on Cornerstone Moderately and Intermediate Government 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 Moderately with a short position of Intermediate Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornerstone Moderately and Intermediate Government.
Diversification Opportunities for Cornerstone Moderately and Intermediate Government
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cornerstone and Intermediate is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Cornerstone Moderately Aggress and Intermediate Government Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Government and Cornerstone Moderately 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 Moderately Aggressive are associated (or correlated) with Intermediate Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Government has no effect on the direction of Cornerstone Moderately i.e., Cornerstone Moderately and Intermediate Government go up and down completely randomly.
Pair Corralation between Cornerstone Moderately and Intermediate Government
Assuming the 90 days horizon Cornerstone Moderately Aggressive is expected to generate 3.91 times more return on investment than Intermediate Government. However, Cornerstone Moderately is 3.91 times more volatile than Intermediate Government Bond. It trades about 0.14 of its potential returns per unit of risk. Intermediate Government Bond is currently generating about -0.29 per unit of risk. If you would invest 2,797 in Cornerstone Moderately Aggressive on April 30, 2025 and sell it today you would earn a total of 27.00 from holding Cornerstone Moderately Aggressive or generate 0.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cornerstone Moderately Aggress vs. Intermediate Government Bond
Performance |
| Timeline |
| Cornerstone Moderately |
| Intermediate Government |
Cornerstone Moderately and Intermediate Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cornerstone Moderately and Intermediate Government
The main advantage of trading using opposite Cornerstone Moderately and Intermediate Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornerstone Moderately position performs unexpectedly, Intermediate Government 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 Intermediate Government will offset losses from the drop in Intermediate Government's long position.| Cornerstone Moderately vs. Capital Growth Fund | Cornerstone Moderately vs. International Fund International | Cornerstone Moderately vs. Growth Income Fund | Cornerstone Moderately vs. Income Stock 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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