Correlation Between Lifex Inflation-protec and Lifex Inflation-protec

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

By analyzing existing cross correlation between Lifex Inflation Protected Income and Lifex Inflation Protected Income, you can compare the effects of market volatilities on Lifex Inflation-protec and Lifex Inflation-protec 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 Lifex Inflation-protec with a short position of Lifex Inflation-protec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifex Inflation-protec and Lifex Inflation-protec.

Diversification Opportunities for Lifex Inflation-protec and Lifex Inflation-protec

1.0

Correlation Coefficient

Lifex Inflation-protec  Lifex Inflation-protec

No risk reduction

The 3 months correlation between Lifex and Lifex is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Lifex Inflation Protected Inco and Lifex Inflation Protected Inco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifex Inflation-protec and Lifex Inflation-protec 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 Lifex Inflation Protected Income are associated (or correlated) with Lifex Inflation-protec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifex Inflation-protec has no effect on the direction of Lifex Inflation-protec i.e., Lifex Inflation-protec and Lifex Inflation-protec go up and down completely randomly.

Pair Corralation between Lifex Inflation-protec and Lifex Inflation-protec

Assuming the 90 days horizon Lifex Inflation-protec is expected to generate 1.05 times less return on investment than Lifex Inflation-protec. But when comparing it to its historical volatility, Lifex Inflation Protected Income is 1.16 times less risky than Lifex Inflation-protec. It trades about 0.07 of its potential returns per unit of risk. Lifex Inflation Protected Income is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,812  in Lifex Inflation Protected Income on August 17, 2024 and sell it today you would earn a total of  96.00  from holding Lifex Inflation Protected Income or generate 5.3% return on investment over 90 days.

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

Lifex Inflation Protected Inco  vs.  Lifex Inflation Protected Inco

Lifex Inflation-protec

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lifex Inflation Protected Income are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Lifex Inflation-protec is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lifex Inflation-protec

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lifex Inflation Protected Income are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Lifex Inflation-protec is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lifex Inflation-protec and Lifex Inflation-protec

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

The idea behind Lifex Inflation Protected Income and Lifex Inflation Protected Income 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.