Correlation Between Alpha Architect and Swan Hedged
Can any of the company-specific risk be diversified away by investing in both Alpha Architect and Swan Hedged 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 Swan Hedged 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 Swan Hedged Equity, you can compare the effects of market volatilities on Alpha Architect and Swan Hedged 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 Swan Hedged. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Architect and Swan Hedged.
Diversification Opportunities for Alpha Architect and Swan Hedged
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alpha and Swan is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Architect Quantitative and Swan Hedged Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swan Hedged Equity 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 Swan Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swan Hedged Equity has no effect on the direction of Alpha Architect i.e., Alpha Architect and Swan Hedged go up and down completely randomly.
Pair Corralation between Alpha Architect and Swan Hedged
Given the investment horizon of 90 days Alpha Architect Quantitative is expected to generate 1.81 times more return on investment than Swan Hedged. However, Alpha Architect is 1.81 times more volatile than Swan Hedged Equity. It trades about 0.08 of its potential returns per unit of risk. Swan Hedged Equity is currently generating about 0.13 per unit of risk. If you would invest 4,139 in Alpha Architect Quantitative on September 1, 2024 and sell it today you would earn a total of 620.00 from holding Alpha Architect Quantitative or generate 14.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.47% |
| Values | Daily Returns |
Alpha Architect Quantitative vs. Swan Hedged Equity
Performance |
| Timeline |
| Alpha Architect Quan |
| Swan Hedged Equity |
Alpha Architect and Swan Hedged Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alpha Architect and Swan Hedged
The main advantage of trading using opposite Alpha Architect and Swan Hedged positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpha Architect position performs unexpectedly, Swan Hedged 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 Swan Hedged will offset losses from the drop in Swan Hedged's long position.| Alpha Architect vs. Alpha Architect International | Alpha Architect vs. Alpha Architect Quantitative | Alpha Architect vs. Alpha Architect International | Alpha Architect vs. Alpha Architect Value |
| Swan Hedged vs. Core Alternative ETF | Swan Hedged vs. Invesco SP 500 | Swan Hedged vs. ETF Series Solutions | Swan Hedged vs. WisdomTree Target Range |
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 CEOs Directory module to screen CEOs from public companies around the world.
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