Correlation Between Alphacentric Hedged and Growth Allocation
Can any of the company-specific risk be diversified away by investing in both Alphacentric Hedged and Growth Allocation 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 Growth Allocation 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 Growth Allocation Fund, you can compare the effects of market volatilities on Alphacentric Hedged and Growth Allocation 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 Growth Allocation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphacentric Hedged and Growth Allocation.
Diversification Opportunities for Alphacentric Hedged and Growth Allocation
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alphacentric and Growth is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Alphacentric Hedged Market and Growth Allocation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Allocation 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 Growth Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Allocation has no effect on the direction of Alphacentric Hedged i.e., Alphacentric Hedged and Growth Allocation go up and down completely randomly.
Pair Corralation between Alphacentric Hedged and Growth Allocation
Assuming the 90 days horizon Alphacentric Hedged Market is expected to generate 1.17 times more return on investment than Growth Allocation. However, Alphacentric Hedged is 1.17 times more volatile than Growth Allocation Fund. It trades about -0.01 of its potential returns per unit of risk. Growth Allocation Fund is currently generating about -0.03 per unit of risk. If you would invest 2,849 in Alphacentric Hedged Market on October 30, 2024 and sell it today you would lose (9.00) from holding Alphacentric Hedged Market or give up 0.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alphacentric Hedged Market vs. Growth Allocation Fund
Performance |
| Timeline |
| Alphacentric Hedged |
| Growth Allocation |
Alphacentric Hedged and Growth Allocation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphacentric Hedged and Growth Allocation
The main advantage of trading using opposite Alphacentric Hedged and Growth Allocation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphacentric Hedged position performs unexpectedly, Growth Allocation 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 Growth Allocation will offset losses from the drop in Growth Allocation's long position.The idea behind Alphacentric Hedged Market and Growth Allocation Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Stocks Directory module to find actively traded stocks across global markets.
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