Correlation Between James Alpha and Global Opportunity
Can any of the company-specific risk be diversified away by investing in both James Alpha and Global Opportunity 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 James Alpha and Global Opportunity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between James Alpha Global and Global Opportunity Portfolio, you can compare the effects of market volatilities on James Alpha and Global Opportunity 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 James Alpha with a short position of Global Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of James Alpha and Global Opportunity.
Diversification Opportunities for James Alpha and Global Opportunity
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between James and Global is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding James Alpha Global and Global Opportunity Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Opportunity and James Alpha 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 James Alpha Global are associated (or correlated) with Global Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Opportunity has no effect on the direction of James Alpha i.e., James Alpha and Global Opportunity go up and down completely randomly.
Pair Corralation between James Alpha and Global Opportunity
Assuming the 90 days horizon James Alpha is expected to generate 7.38 times less return on investment than Global Opportunity. But when comparing it to its historical volatility, James Alpha Global is 1.59 times less risky than Global Opportunity. It trades about 0.01 of its potential returns per unit of risk. Global Opportunity Portfolio is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,686 in Global Opportunity Portfolio on November 28, 2024 and sell it today you would earn a total of 48.00 from holding Global Opportunity Portfolio or generate 1.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
James Alpha Global vs. Global Opportunity Portfolio
Performance |
| Timeline |
| James Alpha Global |
| Global Opportunity |
James Alpha and Global Opportunity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with James Alpha and Global Opportunity
The main advantage of trading using opposite James Alpha and Global Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if James Alpha position performs unexpectedly, Global Opportunity 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 Global Opportunity will offset losses from the drop in Global Opportunity's long position.| James Alpha vs. James Alpha Global | James Alpha vs. James Alpha Global | James Alpha vs. Virtus Global Real | James Alpha vs. Virtus Global Real |
| Global Opportunity vs. Morgan Stanley Multi | Global Opportunity vs. Growth Portfolio Class | Global Opportunity vs. Morgan Stanley Insti | Global Opportunity vs. Virtus Kar Small Cap |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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