Correlation Between Astar and Floating Rate
Can any of the company-specific risk be diversified away by investing in both Astar and Floating Rate 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 Astar and Floating Rate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and Floating Rate Fund, you can compare the effects of market volatilities on Astar and Floating Rate 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 Astar with a short position of Floating Rate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and Floating Rate.
Diversification Opportunities for Astar and Floating Rate
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Astar and Floating is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Floating Rate Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Floating Rate and Astar 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 Astar are associated (or correlated) with Floating Rate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Floating Rate has no effect on the direction of Astar i.e., Astar and Floating Rate go up and down completely randomly.
Pair Corralation between Astar and Floating Rate
Assuming the 90 days trading horizon Astar is expected to generate 42.62 times more return on investment than Floating Rate. However, Astar is 42.62 times more volatile than Floating Rate Fund. It trades about 0.01 of its potential returns per unit of risk. Floating Rate Fund is currently generating about 0.24 per unit of risk. If you would invest 7.90 in Astar on November 2, 2024 and sell it today you would lose (2.89) from holding Astar or give up 36.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 60.32% |
| Values | Daily Returns |
Astar vs. Floating Rate Fund
Performance |
| Timeline |
| Astar |
| Floating Rate |
Astar and Floating Rate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astar and Floating Rate
The main advantage of trading using opposite Astar and Floating Rate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar position performs unexpectedly, Floating Rate 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 Floating Rate will offset losses from the drop in Floating Rate's long position.The idea behind Astar and Floating Rate Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Floating Rate vs. Ab Bond Inflation | Floating Rate vs. Aqr Managed Futures | Floating Rate vs. Tiaa Cref Inflation Linked Bond | Floating Rate vs. Abbey Capital Futures |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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