Correlation Between Enhanced Large and Retirement Living

Can any of the company-specific risk be diversified away by investing in both Enhanced Large and Retirement Living 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 Large and Retirement Living 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 Retirement Living Through, you can compare the effects of market volatilities on Enhanced Large and Retirement Living 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 Large with a short position of Retirement Living. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enhanced Large and Retirement Living.

Diversification Opportunities for Enhanced Large and Retirement Living

0.59

Correlation Coefficient

Enhanced Large  Retirement Living

Very weak diversification

The 3 months correlation between Enhanced and Retirement is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Enhanced Large Pany and Retirement Living Through in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retirement Living Through and Enhanced Large 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 Retirement Living. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retirement Living Through has no effect on the direction of Enhanced Large i.e., Enhanced Large and Retirement Living go up and down completely randomly.

Pair Corralation between Enhanced Large and Retirement Living

Assuming the 90 days horizon Enhanced Large Pany is expected to generate 2.68 times more return on investment than Retirement Living. However, Enhanced Large is 2.68 times more volatile than Retirement Living Through. It trades about 0.29 of its potential returns per unit of risk. Retirement Living Through is currently generating about 0.28 per unit of risk. If you would invest  1,399  in Enhanced Large Pany on May 1, 2025 and sell it today you would earn a total of  204.00  from holding Enhanced Large Pany or generate 14.58% return on investment over 90 days.

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

Enhanced Large Pany  vs.  Retirement Living Through

Enhanced Large Pany

Risk-Adjusted Performance

Solid

Over the last 90 days Enhanced Large Pany has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak essential indicators, Enhanced Large showed solid returns over the last few months and may actually be approaching a breakup point.

Retirement Living Through

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Retirement Living Through are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Retirement Living 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 Large and Retirement Living

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

The idea behind Enhanced Large Pany and Retirement Living Through 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.