Correlation Between Applied Finance and Tfa Alphagen
Can any of the company-specific risk be diversified away by investing in both Applied Finance and Tfa Alphagen 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 Tfa Alphagen 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 Tfa Alphagen Growth, you can compare the effects of market volatilities on Applied Finance and Tfa Alphagen 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 Tfa Alphagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Tfa Alphagen.
Diversification Opportunities for Applied Finance and Tfa Alphagen
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Applied and Tfa is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Tfa Alphagen Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tfa Alphagen Growth 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 Tfa Alphagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tfa Alphagen Growth has no effect on the direction of Applied Finance i.e., Applied Finance and Tfa Alphagen go up and down completely randomly.
Pair Corralation between Applied Finance and Tfa Alphagen
Assuming the 90 days horizon Applied Finance is expected to generate 4.16 times less return on investment than Tfa Alphagen. In addition to that, Applied Finance is 1.21 times more volatile than Tfa Alphagen Growth. It trades about 0.02 of its total potential returns per unit of risk. Tfa Alphagen Growth is currently generating about 0.08 per unit of volatility. If you would invest 1,034 in Tfa Alphagen Growth on October 25, 2024 and sell it today you would earn a total of 103.00 from holding Tfa Alphagen Growth or generate 9.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Explorer vs. Tfa Alphagen Growth
Performance |
| Timeline |
| Applied Finance Explorer |
| Tfa Alphagen Growth |
Applied Finance and Tfa Alphagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and Tfa Alphagen
The main advantage of trading using opposite Applied Finance and Tfa Alphagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, Tfa Alphagen 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 Tfa Alphagen will offset losses from the drop in Tfa Alphagen's 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 |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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