Correlation Between Astor Long/short and Alphacentric Income
Can any of the company-specific risk be diversified away by investing in both Astor Long/short and Alphacentric Income 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 Astor Long/short and Alphacentric Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astor Longshort Fund and Alphacentric Income Opportunities, you can compare the effects of market volatilities on Astor Long/short and Alphacentric Income 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 Astor Long/short with a short position of Alphacentric Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astor Long/short and Alphacentric Income.
Diversification Opportunities for Astor Long/short and Alphacentric Income
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Astor and Alphacentric is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Astor Longshort Fund and Alphacentric Income Opportunit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphacentric Income and Astor Long/short 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 Astor Longshort Fund are associated (or correlated) with Alphacentric Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphacentric Income has no effect on the direction of Astor Long/short i.e., Astor Long/short and Alphacentric Income go up and down completely randomly.
Pair Corralation between Astor Long/short and Alphacentric Income
Assuming the 90 days horizon Astor Longshort Fund is expected to generate 1.31 times more return on investment than Alphacentric Income. However, Astor Long/short is 1.31 times more volatile than Alphacentric Income Opportunities. It trades about 0.15 of its potential returns per unit of risk. Alphacentric Income Opportunities is currently generating about 0.07 per unit of risk. If you would invest 1,222 in Astor Longshort Fund on September 1, 2024 and sell it today you would earn a total of 99.00 from holding Astor Longshort Fund or generate 8.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Astor Longshort Fund vs. Alphacentric Income Opportunit
Performance |
| Timeline |
| Astor Long/short |
| Alphacentric Income |
Astor Long/short and Alphacentric Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astor Long/short and Alphacentric Income
The main advantage of trading using opposite Astor Long/short and Alphacentric Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astor Long/short position performs unexpectedly, Alphacentric Income 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 Alphacentric Income will offset losses from the drop in Alphacentric Income's long position.The idea behind Astor Longshort Fund and Alphacentric Income Opportunities 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.
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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