Correlation Between Rational Special and Core Plus

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

By analyzing existing cross correlation between Rational Special Situations and Core Plus Income, you can compare the effects of market volatilities on Rational Special and Core Plus 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 Special with a short position of Core Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rational Special and Core Plus.

Diversification Opportunities for Rational Special and Core Plus

0.85

Correlation Coefficient

Rational Special  Core Plus

Very poor diversification

The 3 months correlation between Rational and Core is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Rational Special Situations and Core Plus Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Plus Income and Rational Special 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 Special Situations are associated (or correlated) with Core Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Plus Income has no effect on the direction of Rational Special i.e., Rational Special and Core Plus go up and down completely randomly.

Pair Corralation between Rational Special and Core Plus

Assuming the 90 days horizon Rational Special Situations is expected to generate 0.39 times more return on investment than Core Plus. However, Rational Special Situations is 2.54 times less risky than Core Plus. It trades about 0.51 of its potential returns per unit of risk. Core Plus Income is currently generating about 0.17 per unit of risk. If you would invest  1,767  in Rational Special Situations on August 24, 2025 and sell it today you would earn a total of  48.00  from holding Rational Special Situations or generate 2.72% return on investment over 90 days.

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

Rational Special Situations  vs.  Core Plus Income

Rational Special Sit

Risk-Adjusted Performance

High

Compared to the overall equity markets, risk-adjusted returns on investments in Rational Special Situations are ranked lower than 40 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Rational Special is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Core Plus Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Core Plus Income are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Core Plus 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 Special and Core Plus

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

The idea behind Rational Special Situations and Core Plus 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.