Correlation Between Adaptive Alpha and Exchange Traded
Can any of the company-specific risk be diversified away by investing in both Adaptive Alpha and Exchange Traded 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 Adaptive Alpha and Exchange Traded into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adaptive Alpha Opportunities and Exchange Traded Concepts, you can compare the effects of market volatilities on Adaptive Alpha and Exchange Traded 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 Adaptive Alpha with a short position of Exchange Traded. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adaptive Alpha and Exchange Traded.
Diversification Opportunities for Adaptive Alpha and Exchange Traded
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Adaptive and Exchange is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Adaptive Alpha Opportunities and Exchange Traded Concepts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Traded Concepts and Adaptive Alpha 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 Adaptive Alpha Opportunities are associated (or correlated) with Exchange Traded. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Traded Concepts has no effect on the direction of Adaptive Alpha i.e., Adaptive Alpha and Exchange Traded go up and down completely randomly.
Pair Corralation between Adaptive Alpha and Exchange Traded
Given the investment horizon of 90 days Adaptive Alpha is expected to generate 1.2 times less return on investment than Exchange Traded. In addition to that, Adaptive Alpha is 1.84 times more volatile than Exchange Traded Concepts. It trades about 0.08 of its total potential returns per unit of risk. Exchange Traded Concepts is currently generating about 0.17 per unit of volatility. If you would invest 2,179 in Exchange Traded Concepts on September 2, 2024 and sell it today you would earn a total of 57.00 from holding Exchange Traded Concepts or generate 2.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 8.06% |
| Values | Daily Returns |
Adaptive Alpha Opportunities vs. Exchange Traded Concepts
Performance |
| Timeline |
| Adaptive Alpha Oppor |
| Exchange Traded Concepts |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Adaptive Alpha and Exchange Traded Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adaptive Alpha and Exchange Traded
The main advantage of trading using opposite Adaptive Alpha and Exchange Traded positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adaptive Alpha position performs unexpectedly, Exchange Traded 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 Exchange Traded will offset losses from the drop in Exchange Traded's long position.| Adaptive Alpha vs. First Trust Active | Adaptive Alpha vs. Absolute Core Strategy | Adaptive Alpha vs. Pacer Lunt Large | Adaptive Alpha vs. SmartETFs Asia Pacific |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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