Correlation Between Alphacentric Hedged and Financial Industries
Can any of the company-specific risk be diversified away by investing in both Alphacentric Hedged and Financial Industries 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 Alphacentric Hedged and Financial Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphacentric Hedged Market and Financial Industries Fund, you can compare the effects of market volatilities on Alphacentric Hedged and Financial Industries 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 Alphacentric Hedged with a short position of Financial Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphacentric Hedged and Financial Industries.
Diversification Opportunities for Alphacentric Hedged and Financial Industries
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alphacentric and Financial is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Alphacentric Hedged Market and Financial Industries Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Industries and Alphacentric 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 Alphacentric Hedged Market are associated (or correlated) with Financial Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Industries has no effect on the direction of Alphacentric Hedged i.e., Alphacentric Hedged and Financial Industries go up and down completely randomly.
Pair Corralation between Alphacentric Hedged and Financial Industries
Assuming the 90 days horizon Alphacentric Hedged is expected to generate 1.22 times less return on investment than Financial Industries. But when comparing it to its historical volatility, Alphacentric Hedged Market is 2.04 times less risky than Financial Industries. It trades about 0.06 of its potential returns per unit of risk. Financial Industries Fund is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,512 in Financial Industries Fund on October 16, 2024 and sell it today you would earn a total of 303.00 from holding Financial Industries Fund or generate 20.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alphacentric Hedged Market vs. Financial Industries Fund
Performance |
| Timeline |
| Alphacentric Hedged |
| Financial Industries |
Alphacentric Hedged and Financial Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphacentric Hedged and Financial Industries
The main advantage of trading using opposite Alphacentric Hedged and Financial Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphacentric Hedged position performs unexpectedly, Financial Industries 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 Financial Industries will offset losses from the drop in Financial Industries' long position.| Alphacentric Hedged vs. Catalystmillburn Hedge Strategy | Alphacentric Hedged vs. Hundredfold Select Alternative | Alphacentric Hedged vs. Rational Real Strategies |
| Financial Industries vs. Alphacentric Hedged Market | Financial Industries vs. Aqr Sustainable Long Short | Financial Industries vs. Locorr Market Trend | Financial Industries vs. Calvert Developed Market |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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