Correlation Between Cm Modity and United Kingdom

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

By analyzing existing cross correlation between Cm Modity Index and United Kingdom Small, you can compare the effects of market volatilities on Cm Modity and United Kingdom 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 Cm Modity with a short position of United Kingdom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cm Modity and United Kingdom.

Diversification Opportunities for Cm Modity and United Kingdom

0.65

Correlation Coefficient

Cm Modity  United Kingdom

Poor diversification

The 3 months correlation between COMIX and United is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Cm Modity Index and United Kingdom Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Kingdom Small and Cm Modity 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 Cm Modity Index are associated (or correlated) with United Kingdom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Kingdom Small has no effect on the direction of Cm Modity i.e., Cm Modity and United Kingdom go up and down completely randomly.

Pair Corralation between Cm Modity and United Kingdom

Assuming the 90 days horizon Cm Modity is expected to generate 1.63 times less return on investment than United Kingdom. But when comparing it to its historical volatility, Cm Modity Index is 1.25 times less risky than United Kingdom. It trades about 0.14 of its potential returns per unit of risk. United Kingdom Small is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,691  in United Kingdom Small on May 1, 2025 and sell it today you would earn a total of  248.00  from holding United Kingdom Small or generate 9.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Cm Modity Index  vs.  United Kingdom Small

Cm Modity Index

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cm Modity Index are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Cm Modity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

United Kingdom Small

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in United Kingdom Small are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, United Kingdom may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Cm Modity and United Kingdom

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

The idea behind Cm Modity Index and United Kingdom Small 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.