Correlation Between Aggressive Allocation and Conquer Risk

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

By analyzing existing cross correlation between Aggressive Allocation Fund and Conquer Risk Defensive, you can compare the effects of market volatilities on Aggressive Allocation and Conquer Risk 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 Aggressive Allocation with a short position of Conquer Risk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aggressive Allocation and Conquer Risk.

Diversification Opportunities for Aggressive Allocation and Conquer Risk

0.96

Correlation Coefficient

Aggressive Allocation  Conquer Risk

Almost no diversification

The 3 months correlation between Aggressive and Conquer is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Aggressive Allocation Fund and Conquer Risk Defensive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conquer Risk Defensive and Aggressive Allocation 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 Aggressive Allocation Fund are associated (or correlated) with Conquer Risk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conquer Risk Defensive has no effect on the direction of Aggressive Allocation i.e., Aggressive Allocation and Conquer Risk go up and down completely randomly.

Pair Corralation between Aggressive Allocation and Conquer Risk

Assuming the 90 days horizon Aggressive Allocation is expected to generate 1.64 times less return on investment than Conquer Risk. But when comparing it to its historical volatility, Aggressive Allocation Fund is 1.2 times less risky than Conquer Risk. It trades about 0.18 of its potential returns per unit of risk. Conquer Risk Defensive is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,353  in Conquer Risk Defensive on May 19, 2025 and sell it today you would earn a total of  159.00  from holding Conquer Risk Defensive or generate 11.75% return on investment over 90 days.

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

Aggressive Allocation Fund  vs.  Conquer Risk Defensive

Aggressive Allocation

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aggressive Allocation Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Aggressive Allocation may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Conquer Risk Defensive

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Conquer Risk Defensive are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, Conquer Risk may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Aggressive Allocation and Conquer Risk

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

The idea behind Aggressive Allocation Fund and Conquer Risk Defensive 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.