Correlation Between Enhanced and Cohen Steers

Can any of the company-specific risk be diversified away by investing in both Enhanced and Cohen Steers 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 Enhanced and Cohen Steers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Enhanced Large Pany and Cohen Steers Infrastructure, you can compare the effects of market volatilities on Enhanced and Cohen Steers 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 Enhanced with a short position of Cohen Steers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enhanced and Cohen Steers.

Diversification Opportunities for Enhanced and Cohen Steers

0.72

Correlation Coefficient

Enhanced  Cohen Steers

Poor diversification

The 3 months correlation between Enhanced and Cohen is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Enhanced Large Pany and Cohen Steers Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Steers Infrast and Enhanced 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 Enhanced Large Pany are associated (or correlated) with Cohen Steers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Steers Infrast has no effect on the direction of Enhanced i.e., Enhanced and Cohen Steers go up and down completely randomly.

Pair Corralation between Enhanced and Cohen Steers

Assuming the 90 days horizon Enhanced Large Pany is expected to under-perform the Cohen Steers. But the mutual fund apears to be less risky and, when comparing its historical volatility, Enhanced Large Pany is 1.18 times less risky than Cohen Steers. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Cohen Steers Infrastructure is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,278  in Cohen Steers Infrastructure on February 6, 2024 and sell it today you would earn a total of  9.00  from holding Cohen Steers Infrastructure or generate 0.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Enhanced Large Pany  vs.  Cohen Steers Infrastructure

Enhanced Large Pany

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Enhanced Large Pany are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Enhanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cohen Steers Infrast

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cohen Steers Infrastructure are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Cohen Steers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Enhanced and Cohen Steers

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

The idea behind Enhanced Large Pany and Cohen Steers Infrastructure 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.