Correlation Between Alternative Investment and EROAD
Can any of the company-specific risk be diversified away by investing in both Alternative Investment and EROAD 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 Alternative Investment and EROAD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alternative Investment Trust and EROAD, you can compare the effects of market volatilities on Alternative Investment and EROAD 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 Alternative Investment with a short position of EROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alternative Investment and EROAD.
Diversification Opportunities for Alternative Investment and EROAD
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alternative and EROAD is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Alternative Investment Trust and EROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EROAD and Alternative Investment 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 Alternative Investment Trust are associated (or correlated) with EROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EROAD has no effect on the direction of Alternative Investment i.e., Alternative Investment and EROAD go up and down completely randomly.
Pair Corralation between Alternative Investment and EROAD
Assuming the 90 days trading horizon Alternative Investment Trust is expected to generate 0.32 times more return on investment than EROAD. However, Alternative Investment Trust is 3.11 times less risky than EROAD. It trades about 0.21 of its potential returns per unit of risk. EROAD is currently generating about 0.06 per unit of risk. If you would invest 140.00 in Alternative Investment Trust on August 25, 2024 and sell it today you would earn a total of 5.00 from holding Alternative Investment Trust or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alternative Investment Trust vs. EROAD
Performance |
| Timeline |
| Alternative Investment |
| EROAD |
Alternative Investment and EROAD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alternative Investment and EROAD
The main advantage of trading using opposite Alternative Investment and EROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alternative Investment position performs unexpectedly, EROAD 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 EROAD will offset losses from the drop in EROAD's long position.| Alternative Investment vs. WiseTech Global Limited | Alternative Investment vs. Energy Technologies Limited | Alternative Investment vs. Mach7 Technologies | Alternative Investment vs. Australian Unity Office |
| EROAD vs. Microequities Asset Management | EROAD vs. National Australia Bank | EROAD vs. Perpetual Credit Income | EROAD vs. Queste Communications |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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