Correlation Between Alternative Asset and Regional Bank
Can any of the company-specific risk be diversified away by investing in both Alternative Asset and Regional Bank 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 Alternative Asset and Regional Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alternative Asset Allocation and Regional Bank Fund, you can compare the effects of market volatilities on Alternative Asset and Regional Bank 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 Alternative Asset with a short position of Regional Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alternative Asset and Regional Bank.
Diversification Opportunities for Alternative Asset and Regional Bank
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alternative and Regional is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Alternative Asset Allocation and Regional Bank Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Bank and Alternative Asset 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 Alternative Asset Allocation are associated (or correlated) with Regional Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Bank has no effect on the direction of Alternative Asset i.e., Alternative Asset and Regional Bank go up and down completely randomly.
Pair Corralation between Alternative Asset and Regional Bank
Assuming the 90 days horizon Alternative Asset Allocation is expected to generate 0.21 times more return on investment than Regional Bank. However, Alternative Asset Allocation is 4.79 times less risky than Regional Bank. It trades about 0.24 of its potential returns per unit of risk. Regional Bank Fund is currently generating about -0.03 per unit of risk. If you would invest 1,606 in Alternative Asset Allocation on September 15, 2024 and sell it today you would earn a total of 14.00 from holding Alternative Asset Allocation or generate 0.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alternative Asset Allocation vs. Regional Bank Fund
Performance |
| Timeline |
| Alternative Asset |
| Regional Bank |
Alternative Asset and Regional Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alternative Asset and Regional Bank
The main advantage of trading using opposite Alternative Asset and Regional Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alternative Asset position performs unexpectedly, Regional Bank 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 Regional Bank will offset losses from the drop in Regional Bank's long position.| Alternative Asset vs. Regional Bank Fund | Alternative Asset vs. Regional Bank Fund | Alternative Asset vs. Multimanager Lifestyle Moderate | Alternative Asset vs. Multimanager Lifestyle Balanced |
| Regional Bank vs. Global Equity Fund | Regional Bank vs. Jhancock Global Equity | Regional Bank vs. Jhancock Global Equity | Regional Bank vs. Jhancock Global Equity |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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