Correlation Between Cref Inflation-linked and Global Resources

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

By analyzing existing cross correlation between Cref Inflation Linked Bond and Global Resources Fund, you can compare the effects of market volatilities on Cref Inflation-linked and Global Resources 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 Cref Inflation-linked with a short position of Global Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cref Inflation-linked and Global Resources.

Diversification Opportunities for Cref Inflation-linked and Global Resources

0.82

Correlation Coefficient

Cref Inflation-linked  Global Resources

Very poor diversification

The 3 months correlation between Cref and Global is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Cref Inflation Linked Bond and Global Resources Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Resources and Cref Inflation-linked 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 Cref Inflation Linked Bond are associated (or correlated) with Global Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Resources has no effect on the direction of Cref Inflation-linked i.e., Cref Inflation-linked and Global Resources go up and down completely randomly.

Pair Corralation between Cref Inflation-linked and Global Resources

Assuming the 90 days trading horizon Cref Inflation-linked is expected to generate 6.95 times less return on investment than Global Resources. But when comparing it to its historical volatility, Cref Inflation Linked Bond is 4.64 times less risky than Global Resources. It trades about 0.21 of its potential returns per unit of risk. Global Resources Fund is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  388.00  in Global Resources Fund on May 15, 2025 and sell it today you would earn a total of  68.00  from holding Global Resources Fund or generate 17.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Cref Inflation Linked Bond  vs.  Global Resources Fund

Cref Inflation Linked

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cref Inflation Linked Bond are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Cref Inflation-linked is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Global Resources

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global Resources Fund are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Global Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cref Inflation-linked and Global Resources

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

The idea behind Cref Inflation Linked Bond and Global Resources Fund 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.