Correlation Between Lifestyle and College Retirement
Can any of the company-specific risk be diversified away by investing in both Lifestyle and College Retirement 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 Lifestyle and College Retirement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifestyle Ii Moderate and College Retirement Equities, you can compare the effects of market volatilities on Lifestyle and College Retirement 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 Lifestyle with a short position of College Retirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifestyle and College Retirement.
Diversification Opportunities for Lifestyle and College Retirement
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Lifestyle and College is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Lifestyle Ii Moderate and College Retirement Equities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on College Retirement and Lifestyle 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 Lifestyle Ii Moderate are associated (or correlated) with College Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of College Retirement has no effect on the direction of Lifestyle i.e., Lifestyle and College Retirement go up and down completely randomly.
Pair Corralation between Lifestyle and College Retirement
Assuming the 90 days horizon Lifestyle is expected to generate 1.9 times less return on investment than College Retirement. But when comparing it to its historical volatility, Lifestyle Ii Moderate is 2.09 times less risky than College Retirement. It trades about 0.25 of its potential returns per unit of risk. College Retirement Equities is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 33,709 in College Retirement Equities on May 7, 2025 and sell it today you would earn a total of 3,280 from holding College Retirement Equities or generate 9.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Lifestyle Ii Moderate vs. College Retirement Equities
Performance |
Timeline |
Lifestyle Ii Moderate |
College Retirement |
Lifestyle and College Retirement Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lifestyle and College Retirement
The main advantage of trading using opposite Lifestyle and College Retirement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifestyle position performs unexpectedly, College Retirement 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 College Retirement will offset losses from the drop in College Retirement's long position.Lifestyle vs. Barings Global Floating | Lifestyle vs. Morningstar Global Income | Lifestyle vs. Qs Global Equity | Lifestyle vs. Harding Loevner Global |
College Retirement vs. Ab Equity Income | College Retirement vs. Ab Select Equity | College Retirement vs. Smallcap World Fund | College Retirement vs. Dodge International Stock |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Transaction History View history of all your transactions and understand their impact on performance |