Correlation Between Global Opportunity and James Alpha
Can any of the company-specific risk be diversified away by investing in both Global Opportunity and James Alpha 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 Global Opportunity and James Alpha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Opportunity Portfolio and James Alpha Global, you can compare the effects of market volatilities on Global Opportunity and James Alpha 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 Global Opportunity with a short position of James Alpha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Opportunity and James Alpha.
Diversification Opportunities for Global Opportunity and James Alpha
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and James is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Global Opportunity Portfolio and James Alpha Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James Alpha Global and Global Opportunity 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 Global Opportunity Portfolio are associated (or correlated) with James Alpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James Alpha Global has no effect on the direction of Global Opportunity i.e., Global Opportunity and James Alpha go up and down completely randomly.
Pair Corralation between Global Opportunity and James Alpha
Assuming the 90 days horizon Global Opportunity Portfolio is expected to generate 0.85 times more return on investment than James Alpha. However, Global Opportunity Portfolio is 1.18 times less risky than James Alpha. It trades about 0.28 of its potential returns per unit of risk. James Alpha Global is currently generating about 0.1 per unit of risk. If you would invest 3,557 in Global Opportunity Portfolio on November 4, 2024 and sell it today you would earn a total of 171.00 from holding Global Opportunity Portfolio or generate 4.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Opportunity Portfolio vs. James Alpha Global
Performance |
| Timeline |
| Global Opportunity |
| James Alpha Global |
Global Opportunity and James Alpha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Opportunity and James Alpha
The main advantage of trading using opposite Global Opportunity and James Alpha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Opportunity position performs unexpectedly, James Alpha 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 James Alpha will offset losses from the drop in James Alpha's long position.| 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 |
| James Alpha vs. James Alpha Global | James Alpha vs. James Alpha Global | James Alpha vs. James Alpha Structured | James Alpha vs. Global Opportunity Portfolio |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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