Correlation Between Alternative Credit and Hodges Blue
Can any of the company-specific risk be diversified away by investing in both Alternative Credit and Hodges Blue 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 Alternative Credit and Hodges Blue into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alternative Credit Income and Hodges Blue Chip, you can compare the effects of market volatilities on Alternative Credit and Hodges Blue 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 Alternative Credit with a short position of Hodges Blue. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alternative Credit and Hodges Blue.
Diversification Opportunities for Alternative Credit and Hodges Blue
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alternative and Hodges is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Alternative Credit Income and Hodges Blue Chip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hodges Blue Chip and Alternative Credit 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 Alternative Credit Income are associated (or correlated) with Hodges Blue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hodges Blue Chip has no effect on the direction of Alternative Credit i.e., Alternative Credit and Hodges Blue go up and down completely randomly.
Pair Corralation between Alternative Credit and Hodges Blue
Assuming the 90 days horizon Alternative Credit is expected to generate 4.85 times less return on investment than Hodges Blue. But when comparing it to its historical volatility, Alternative Credit Income is 2.92 times less risky than Hodges Blue. It trades about 0.09 of its potential returns per unit of risk. Hodges Blue Chip is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,844 in Hodges Blue Chip on August 31, 2024 and sell it today you would earn a total of 922.00 from holding Hodges Blue Chip or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Alternative Credit Income vs. Hodges Blue Chip
Performance |
| Timeline |
| Alternative Credit Income |
| Hodges Blue Chip |
Alternative Credit and Hodges Blue Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alternative Credit and Hodges Blue
The main advantage of trading using opposite Alternative Credit and Hodges Blue positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alternative Credit position performs unexpectedly, Hodges Blue 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 Hodges Blue will offset losses from the drop in Hodges Blue's long position.| Alternative Credit vs. Davis Financial Fund | Alternative Credit vs. Gabelli Global Financial | Alternative Credit vs. Mesirow Financial Small | Alternative Credit vs. Transamerica Financial Life |
| Hodges Blue vs. Aquagold International | Hodges Blue vs. Morningstar Unconstrained Allocation | Hodges Blue vs. Thrivent High Yield | Hodges Blue vs. Via Renewables |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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