Correlation Between Applied Finance and Altegris Futures
Can any of the company-specific risk be diversified away by investing in both Applied Finance and Altegris Futures 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 Applied Finance and Altegris Futures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Explorer and Altegris Futures Evolution, you can compare the effects of market volatilities on Applied Finance and Altegris Futures 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 Applied Finance with a short position of Altegris Futures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Altegris Futures.
Diversification Opportunities for Applied Finance and Altegris Futures
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Applied and Altegris is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Altegris Futures Evolution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altegris Futures Evo and Applied Finance 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 Applied Finance Explorer are associated (or correlated) with Altegris Futures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altegris Futures Evo has no effect on the direction of Applied Finance i.e., Applied Finance and Altegris Futures go up and down completely randomly.
Pair Corralation between Applied Finance and Altegris Futures
Assuming the 90 days horizon Applied Finance Explorer is expected to generate 1.81 times more return on investment than Altegris Futures. However, Applied Finance is 1.81 times more volatile than Altegris Futures Evolution. It trades about 0.26 of its potential returns per unit of risk. Altegris Futures Evolution is currently generating about -0.01 per unit of risk. If you would invest 2,178 in Applied Finance Explorer on November 7, 2024 and sell it today you would earn a total of 105.00 from holding Applied Finance Explorer or generate 4.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Explorer vs. Altegris Futures Evolution
Performance |
| Timeline |
| Applied Finance Explorer |
| Altegris Futures Evo |
Applied Finance and Altegris Futures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and Altegris Futures
The main advantage of trading using opposite Applied Finance and Altegris Futures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, Altegris Futures 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 Altegris Futures will offset losses from the drop in Altegris Futures' long position.| Applied Finance vs. Thrivent Small Cap | Applied Finance vs. Applied Finance Select | Applied Finance vs. Parnassus Endeavor Fund | Applied Finance vs. Queens Road Small |
| Altegris Futures vs. Old Westbury Short Term | Altegris Futures vs. Aqr Sustainable Long Short | Altegris Futures vs. Balanced Strategy Fund | Altegris Futures vs. Federated Emerging Market |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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