Correlation Between Alternative Investment and L1 Long
Can any of the company-specific risk be diversified away by investing in both Alternative Investment and L1 Long 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 L1 Long 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 L1 Long Short, you can compare the effects of market volatilities on Alternative Investment and L1 Long 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 L1 Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alternative Investment and L1 Long.
Diversification Opportunities for Alternative Investment and L1 Long
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alternative and LSF is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Alternative Investment Trust and L1 Long Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L1 Long Short 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 L1 Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L1 Long Short has no effect on the direction of Alternative Investment i.e., Alternative Investment and L1 Long go up and down completely randomly.
Pair Corralation between Alternative Investment and L1 Long
Assuming the 90 days trading horizon Alternative Investment Trust is expected to generate 1.08 times more return on investment than L1 Long. However, Alternative Investment is 1.08 times more volatile than L1 Long Short. It trades about 0.04 of its potential returns per unit of risk. L1 Long Short is currently generating about 0.02 per unit of risk. If you would invest 116.00 in Alternative Investment Trust on October 26, 2024 and sell it today you would earn a total of 24.00 from holding Alternative Investment Trust or generate 20.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alternative Investment Trust vs. L1 Long Short
Performance |
| Timeline |
| Alternative Investment |
| L1 Long Short |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Alternative Investment and L1 Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alternative Investment and L1 Long
The main advantage of trading using opposite Alternative Investment and L1 Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alternative Investment position performs unexpectedly, L1 Long 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 L1 Long will offset losses from the drop in L1 Long's long position.| Alternative Investment vs. Nufarm Finance NZ | Alternative Investment vs. Collins Foods | Alternative Investment vs. Mayfield Childcare | Alternative Investment vs. Kneomedia |
| L1 Long vs. MFF Capital Investments | L1 Long vs. Ainsworth Game Technology | L1 Long vs. Carlton Investments | L1 Long vs. Red Hill Iron |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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