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 Value, 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
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Swan and Alpha is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Swan Hedged Equity and Alpha Architect Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Architect Value 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 Value 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 0.52 times more return on investment than Alpha Architect. However, Swan Hedged Equity is 1.93 times less risky than Alpha Architect. It trades about 0.1 of its potential returns per unit of risk. Alpha Architect Value is currently generating about 0.04 per unit of risk. If you would invest 1,738 in Swan Hedged Equity on August 30, 2024 and sell it today you would earn a total of 546.00 from holding Swan Hedged Equity or generate 31.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swan Hedged Equity vs. Alpha Architect Value
Performance |
| Timeline |
| Swan Hedged Equity |
| Alpha Architect Value |
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. Alpha Architect Quantitative | Swan Hedged vs. Alpha Architect International | Swan Hedged vs. Alpha Architect International | Swan Hedged vs. Alpha Architect Quantitative |
| Alpha Architect vs. Alpha Architect Quantitative | Alpha Architect vs. Alpha Architect International | Alpha Architect vs. Alpha Architect International | Alpha Architect vs. Alpha Architect Quantitative |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Stocks Directory Find actively traded stocks across global markets | |
| Global Correlations Find global opportunities by holding instruments from different markets |