Correlation Between New Alternatives and Alternative Credit
Can any of the company-specific risk be diversified away by investing in both New Alternatives and Alternative Credit 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 New Alternatives and Alternative Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Alternatives Fund and Alternative Credit Income, you can compare the effects of market volatilities on New Alternatives and Alternative Credit 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 New Alternatives with a short position of Alternative Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Alternatives and Alternative Credit.
Diversification Opportunities for New Alternatives and Alternative Credit
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and Alternative is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding New Alternatives Fund and Alternative Credit Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternative Credit Income and New Alternatives 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 New Alternatives Fund are associated (or correlated) with Alternative Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternative Credit Income has no effect on the direction of New Alternatives i.e., New Alternatives and Alternative Credit go up and down completely randomly.
Pair Corralation between New Alternatives and Alternative Credit
Assuming the 90 days horizon New Alternatives Fund is expected to under-perform the Alternative Credit. In addition to that, New Alternatives is 4.3 times more volatile than Alternative Credit Income. It trades about -0.01 of its total potential returns per unit of risk. Alternative Credit Income is currently generating about 0.08 per unit of volatility. If you would invest 894.00 in Alternative Credit Income on August 30, 2024 and sell it today you would earn a total of 80.00 from holding Alternative Credit Income or generate 8.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Alternatives Fund vs. Alternative Credit Income
Performance |
| Timeline |
| New Alternatives |
| Alternative Credit Income |
New Alternatives and Alternative Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Alternatives and Alternative Credit
The main advantage of trading using opposite New Alternatives and Alternative Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Alternatives position performs unexpectedly, Alternative Credit 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 Alternative Credit will offset losses from the drop in Alternative Credit's long position.| New Alternatives vs. Blackrock Sm Cap | New Alternatives vs. Delaware Limited Term Diversified | New Alternatives vs. T Rowe Price | New Alternatives vs. Tiaa Cref Small Cap Blend |
| Alternative Credit vs. Aig Government Money | Alternative Credit vs. Blackrock Government Bond | Alternative Credit vs. Dws Government Money | Alternative Credit vs. Franklin Adjustable Government |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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