Correlation Between Alpha Architect and MKAM ETF
Can any of the company-specific risk be diversified away by investing in both Alpha Architect and MKAM ETF 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 Alpha Architect and MKAM ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alpha Architect Gdsdn and MKAM ETF, you can compare the effects of market volatilities on Alpha Architect and MKAM ETF 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 Alpha Architect with a short position of MKAM ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Architect and MKAM ETF.
Diversification Opportunities for Alpha Architect and MKAM ETF
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alpha and MKAM is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Architect Gdsdn and MKAM ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MKAM ETF and Alpha Architect 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 Alpha Architect Gdsdn are associated (or correlated) with MKAM ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MKAM ETF has no effect on the direction of Alpha Architect i.e., Alpha Architect and MKAM ETF go up and down completely randomly.
Pair Corralation between Alpha Architect and MKAM ETF
Given the investment horizon of 90 days Alpha Architect is expected to generate 1.25 times less return on investment than MKAM ETF. In addition to that, Alpha Architect is 1.37 times more volatile than MKAM ETF. It trades about 0.07 of its total potential returns per unit of risk. MKAM ETF is currently generating about 0.12 per unit of volatility. If you would invest 2,778 in MKAM ETF on September 1, 2024 and sell it today you would earn a total of 202.00 from holding MKAM ETF or generate 7.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alpha Architect Gdsdn vs. MKAM ETF
Performance |
| Timeline |
| Alpha Architect Gdsdn |
| MKAM ETF |
Alpha Architect and MKAM ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alpha Architect and MKAM ETF
The main advantage of trading using opposite Alpha Architect and MKAM ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpha Architect position performs unexpectedly, MKAM ETF 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 MKAM ETF will offset losses from the drop in MKAM ETF's long position.| Alpha Architect vs. iShares Core Growth | Alpha Architect vs. ClearShares OCIO ETF | Alpha Architect vs. Collaborative Investment Series | Alpha Architect vs. Northern Lights |
| MKAM ETF vs. FT Vest Equity | MKAM ETF vs. Northern Lights | MKAM ETF vs. Dimensional International High | MKAM ETF vs. Matthews China Discovery |
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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |