Correlation Between Cref Inflation-linked and Large Capital

Can any of the company-specific risk be diversified away by investing in both Cref Inflation-linked and Large Capital 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 Large Capital 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 Large Capital Growth, you can compare the effects of market volatilities on Cref Inflation-linked and Large Capital 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 Large Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cref Inflation-linked and Large Capital.

Diversification Opportunities for Cref Inflation-linked and Large Capital

0.55

Correlation Coefficient

Cref Inflation-linked  Large Capital

Very weak diversification

The 3 months correlation between Cref and Large is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Cref Inflation Linked Bond and Large Capital Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Capital Growth 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 Large Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Capital Growth has no effect on the direction of Cref Inflation-linked i.e., Cref Inflation-linked and Large Capital go up and down completely randomly.

Pair Corralation between Cref Inflation-linked and Large Capital

Assuming the 90 days trading horizon Cref Inflation-linked is expected to generate 2.39 times less return on investment than Large Capital. But when comparing it to its historical volatility, Cref Inflation Linked Bond is 4.22 times less risky than Large Capital. It trades about 0.24 of its potential returns per unit of risk. Large Capital Growth is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,651  in Large Capital Growth on May 14, 2025 and sell it today you would earn a total of  104.00  from holding Large Capital Growth or generate 6.3% return on investment over 90 days.

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

Cref Inflation Linked Bond  vs.  Large Capital Growth

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 18 (%) 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.

Large Capital Growth

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Large Capital Growth are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Large Capital may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Cref Inflation-linked and Large Capital

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

The idea behind Cref Inflation Linked Bond and Large Capital Growth 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.