Correlation Between Strategic Alternatives and Low Duration
Can any of the company-specific risk be diversified away by investing in both Strategic Alternatives and Low Duration 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 Strategic Alternatives and Low Duration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Alternatives Fund and Low Duration Bond Investor, you can compare the effects of market volatilities on Strategic Alternatives and Low Duration 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 Strategic Alternatives with a short position of Low Duration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Alternatives and Low Duration.
Diversification Opportunities for Strategic Alternatives and Low Duration
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between STRATEGIC and Low is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Alternatives Fund and Low Duration Bond Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Low Duration Bond and Strategic Alternatives 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 Strategic Alternatives Fund are associated (or correlated) with Low Duration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Low Duration Bond has no effect on the direction of Strategic Alternatives i.e., Strategic Alternatives and Low Duration go up and down completely randomly.
Pair Corralation between Strategic Alternatives and Low Duration
Assuming the 90 days horizon Strategic Alternatives Fund is expected to generate 1.51 times more return on investment than Low Duration. However, Strategic Alternatives is 1.51 times more volatile than Low Duration Bond Investor. It trades about 0.37 of its potential returns per unit of risk. Low Duration Bond Investor is currently generating about 0.25 per unit of risk. If you would invest 909.00 in Strategic Alternatives Fund on November 9, 2024 and sell it today you would earn a total of 8.00 from holding Strategic Alternatives Fund or generate 0.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strategic Alternatives Fund vs. Low Duration Bond Investor
Performance |
| Timeline |
| Strategic Alternatives |
| Low Duration Bond |
Strategic Alternatives and Low Duration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Alternatives and Low Duration
The main advantage of trading using opposite Strategic Alternatives and Low Duration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Alternatives position performs unexpectedly, Low Duration 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 Low Duration will offset losses from the drop in Low Duration's long position.The idea behind Strategic Alternatives Fund and Low Duration Bond Investor 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.
| Low Duration vs. Ab Municipal Bond | Low Duration vs. Morningstar Municipal Bond | Low Duration vs. Old Westbury Municipal | Low Duration vs. Lord Abbett Intermediate |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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