Correlation Between Aggressive Allocation and Strategic Alternatives
Can any of the company-specific risk be diversified away by investing in both Aggressive Allocation and Strategic Alternatives 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 Aggressive Allocation and Strategic Alternatives into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aggressive Allocation Fund and Strategic Alternatives Fund, you can compare the effects of market volatilities on Aggressive Allocation and Strategic Alternatives 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 Aggressive Allocation with a short position of Strategic Alternatives. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aggressive Allocation and Strategic Alternatives.
Diversification Opportunities for Aggressive Allocation and Strategic Alternatives
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aggressive and Strategic is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Aggressive Allocation Fund and Strategic Alternatives Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Alternatives and Aggressive Allocation 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 Aggressive Allocation Fund are associated (or correlated) with Strategic Alternatives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Alternatives has no effect on the direction of Aggressive Allocation i.e., Aggressive Allocation and Strategic Alternatives go up and down completely randomly.
Pair Corralation between Aggressive Allocation and Strategic Alternatives
Assuming the 90 days horizon Aggressive Allocation Fund is expected to generate 1.21 times more return on investment than Strategic Alternatives. However, Aggressive Allocation is 1.21 times more volatile than Strategic Alternatives Fund. It trades about 0.06 of its potential returns per unit of risk. Strategic Alternatives Fund is currently generating about -0.06 per unit of risk. If you would invest 1,300 in Aggressive Allocation Fund on November 1, 2024 and sell it today you would earn a total of 33.00 from holding Aggressive Allocation Fund or generate 2.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aggressive Allocation Fund vs. Strategic Alternatives Fund
Performance |
| Timeline |
| Aggressive Allocation |
| Strategic Alternatives |
Aggressive Allocation and Strategic Alternatives Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aggressive Allocation and Strategic Alternatives
The main advantage of trading using opposite Aggressive Allocation and Strategic Alternatives positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aggressive Allocation position performs unexpectedly, Strategic Alternatives 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 Strategic Alternatives will offset losses from the drop in Strategic Alternatives' long position.| Aggressive Allocation vs. Us Global Investors | Aggressive Allocation vs. Investec Global Franchise | Aggressive Allocation vs. Gmo Global Equity | Aggressive Allocation vs. Ab Global Bond |
| Strategic Alternatives vs. Artisan High Income | Strategic Alternatives vs. Virtus High Yield | Strategic Alternatives vs. Strategic Advisers Income | Strategic Alternatives vs. City National Rochdale |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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