Correlation Between Swan Hedged and LHA Market
Can any of the company-specific risk be diversified away by investing in both Swan Hedged and LHA Market 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 LHA Market 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 LHA Market State, you can compare the effects of market volatilities on Swan Hedged and LHA Market 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 LHA Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swan Hedged and LHA Market.
Diversification Opportunities for Swan Hedged and LHA Market
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Swan and LHA is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Swan Hedged Equity and LHA Market State in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LHA Market State 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 LHA Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LHA Market State has no effect on the direction of Swan Hedged i.e., Swan Hedged and LHA Market go up and down completely randomly.
Pair Corralation between Swan Hedged and LHA Market
Given the investment horizon of 90 days Swan Hedged Equity is expected to generate 0.95 times more return on investment than LHA Market. However, Swan Hedged Equity is 1.05 times less risky than LHA Market. It trades about 0.17 of its potential returns per unit of risk. LHA Market State is currently generating about 0.05 per unit of risk. If you would invest 2,237 in Swan Hedged Equity on August 29, 2024 and sell it today you would earn a total of 48.00 from holding Swan Hedged Equity or generate 2.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swan Hedged Equity vs. LHA Market State
Performance |
| Timeline |
| Swan Hedged Equity |
| LHA Market State |
Swan Hedged and LHA Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swan Hedged and LHA Market
The main advantage of trading using opposite Swan Hedged and LHA Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swan Hedged position performs unexpectedly, LHA Market 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 LHA Market will offset losses from the drop in LHA Market's long position.| Swan Hedged vs. Alpha Architect Quantitative | Swan Hedged vs. Alpha Architect International | Swan Hedged vs. Alpha Architect International | Swan Hedged vs. Alpha Architect Quantitative |
| LHA Market vs. ETF Series Solutions | LHA Market vs. Northern Lights | LHA Market vs. Innovator Nasdaq 100 Power | LHA Market vs. Tidal ETF Trust |
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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