Correlation Between Rational Inflation and Johcm International

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

By analyzing existing cross correlation between Rational Inflation Growth and Johcm International Select, you can compare the effects of market volatilities on Rational Inflation and Johcm International 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 Rational Inflation with a short position of Johcm International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rational Inflation and Johcm International.

Diversification Opportunities for Rational Inflation and Johcm International

-0.54

Correlation Coefficient

Rational Inflation  Johcm International

Excellent diversification

The 3 months correlation between Rational and Johcm is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Rational Inflation Growth and Johcm International Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johcm International and Rational Inflation 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 Rational Inflation Growth are associated (or correlated) with Johcm International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johcm International has no effect on the direction of Rational Inflation i.e., Rational Inflation and Johcm International go up and down completely randomly.

Pair Corralation between Rational Inflation and Johcm International

Assuming the 90 days horizon Rational Inflation Growth is expected to generate 0.77 times more return on investment than Johcm International. However, Rational Inflation Growth is 1.3 times less risky than Johcm International. It trades about 0.1 of its potential returns per unit of risk. Johcm International Select is currently generating about 0.04 per unit of risk. If you would invest  785.00  in Rational Inflation Growth on August 29, 2024 and sell it today you would earn a total of  164.00  from holding Rational Inflation Growth or generate 20.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.47%
Values	Daily Returns

Rational Inflation Growth  vs.  Johcm International Select

Rational Inflation Growth

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Rational Inflation Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Rational Inflation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Johcm International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Johcm International Select has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Johcm International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rational Inflation and Johcm International

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

The idea behind Rational Inflation Growth and Johcm International Select 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.