Correlation Between Swan Hedged and Alpha Architect
Can any of the company-specific risk be diversified away by investing in both Swan Hedged and Alpha Architect 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 Swan Hedged and Alpha Architect into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swan Hedged Equity and Alpha Architect High, you can compare the effects of market volatilities on Swan Hedged and Alpha Architect 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 Swan Hedged with a short position of Alpha Architect. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swan Hedged and Alpha Architect.
Diversification Opportunities for Swan Hedged and Alpha Architect
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Swan and Alpha is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Swan Hedged Equity and Alpha Architect High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Architect High and Swan Hedged 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 Swan Hedged Equity are associated (or correlated) with Alpha Architect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Architect High has no effect on the direction of Swan Hedged i.e., Swan Hedged and Alpha Architect go up and down completely randomly.
Pair Corralation between Swan Hedged and Alpha Architect
Given the investment horizon of 90 days Swan Hedged Equity is expected to generate 1.33 times more return on investment than Alpha Architect. However, Swan Hedged is 1.33 times more volatile than Alpha Architect High. It trades about 0.35 of its potential returns per unit of risk. Alpha Architect High is currently generating about 0.14 per unit of risk. If you would invest 2,212 in Swan Hedged Equity on September 4, 2024 and sell it today you would earn a total of 83.00 from holding Swan Hedged Equity or generate 3.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swan Hedged Equity vs. Alpha Architect High
Performance |
| Timeline |
| Swan Hedged Equity |
| Alpha Architect High |
Swan Hedged and Alpha Architect Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swan Hedged and Alpha Architect
The main advantage of trading using opposite Swan Hedged and Alpha Architect positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swan Hedged position performs unexpectedly, Alpha Architect 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 Alpha Architect will offset losses from the drop in Alpha Architect's long position.| Swan Hedged vs. Core Alternative ETF | Swan Hedged vs. Aptus Drawdown Managed | Swan Hedged vs. Cambria Value and | Swan Hedged vs. WisdomTree Target Range |
| Alpha Architect vs. Core Alternative ETF | Alpha Architect vs. Aptus Drawdown Managed | Alpha Architect vs. Swan Hedged Equity | Alpha Architect vs. Cambria Value and |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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