Correlation Between Salient Alternative and Energy Basic
Can any of the company-specific risk be diversified away by investing in both Salient Alternative and Energy Basic 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 Salient Alternative and Energy Basic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salient Alternative Beta and Energy Basic Materials, you can compare the effects of market volatilities on Salient Alternative and Energy Basic 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 Salient Alternative with a short position of Energy Basic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salient Alternative and Energy Basic.
Diversification Opportunities for Salient Alternative and Energy Basic
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Salient and Energy is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Salient Alternative Beta and Energy Basic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Basic Materials and Salient Alternative 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 Salient Alternative Beta are associated (or correlated) with Energy Basic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Basic Materials has no effect on the direction of Salient Alternative i.e., Salient Alternative and Energy Basic go up and down completely randomly.
Pair Corralation between Salient Alternative and Energy Basic
Assuming the 90 days horizon Salient Alternative Beta is expected to generate 0.69 times more return on investment than Energy Basic. However, Salient Alternative Beta is 1.45 times less risky than Energy Basic. It trades about 0.08 of its potential returns per unit of risk. Energy Basic Materials is currently generating about -0.02 per unit of risk. If you would invest 1,132 in Salient Alternative Beta on August 25, 2024 and sell it today you would earn a total of 74.00 from holding Salient Alternative Beta or generate 6.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salient Alternative Beta vs. Energy Basic Materials
Performance |
| Timeline |
| Salient Alternative Beta |
| Energy Basic Materials |
Salient Alternative and Energy Basic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salient Alternative and Energy Basic
The main advantage of trading using opposite Salient Alternative and Energy Basic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salient Alternative position performs unexpectedly, Energy Basic 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 Energy Basic will offset losses from the drop in Energy Basic's long position.| Salient Alternative vs. Dodge Global Stock | Salient Alternative vs. Artisan Global Unconstrained | Salient Alternative vs. Dreyfusstandish Global Fixed | Salient Alternative vs. Kinetics Global Fund |
| Energy Basic vs. Putnam Convertible Incm Gwth | Energy Basic vs. Lord Abbett Vertible | Energy Basic vs. Fidelity Vertible Securities | Energy Basic vs. Mainstay Vertible Fund |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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