Correlation Between Alpha Architect and ETF Series
Can any of the company-specific risk be diversified away by investing in both Alpha Architect and ETF Series 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 Alpha Architect and ETF Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alpha Architect Quantitative and ETF Series Solutions, you can compare the effects of market volatilities on Alpha Architect and ETF Series 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 Alpha Architect with a short position of ETF Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Architect and ETF Series.
Diversification Opportunities for Alpha Architect and ETF Series
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Alpha and ETF is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Architect Quantitative and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions and Alpha Architect 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 Alpha Architect Quantitative are associated (or correlated) with ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of Alpha Architect i.e., Alpha Architect and ETF Series go up and down completely randomly.
Pair Corralation between Alpha Architect and ETF Series
Given the investment horizon of 90 days Alpha Architect Quantitative is expected to generate 1.59 times more return on investment than ETF Series. However, Alpha Architect is 1.59 times more volatile than ETF Series Solutions. It trades about 0.13 of its potential returns per unit of risk. ETF Series Solutions is currently generating about 0.11 per unit of risk. If you would invest 5,832 in Alpha Architect Quantitative on September 1, 2024 and sell it today you would earn a total of 1,321 from holding Alpha Architect Quantitative or generate 22.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Alpha Architect Quantitative vs. ETF Series Solutions
Performance |
| Timeline |
| Alpha Architect Quan |
| ETF Series Solutions |
Alpha Architect and ETF Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alpha Architect and ETF Series
The main advantage of trading using opposite Alpha Architect and ETF Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpha Architect position performs unexpectedly, ETF Series 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 ETF Series will offset losses from the drop in ETF Series' long position.| Alpha Architect vs. Freedom Day Dividend | Alpha Architect vs. iShares MSCI China | Alpha Architect vs. iShares Dividend and | Alpha Architect vs. SmartETFs Dividend Builder |
| ETF Series vs. FT Vest Equity | ETF Series vs. Northern Lights | ETF Series vs. Dimensional International High | ETF Series vs. Matthews China Discovery |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |