Correlation Between ALPSSmith Credit and Axonic Strategic
Can any of the company-specific risk be diversified away by investing in both ALPSSmith Credit and Axonic Strategic 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 ALPSSmith Credit and Axonic Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALPSSmith Credit Opportunities and Axonic Strategic Income, you can compare the effects of market volatilities on ALPSSmith Credit and Axonic Strategic 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 ALPSSmith Credit with a short position of Axonic Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALPSSmith Credit and Axonic Strategic.
Diversification Opportunities for ALPSSmith Credit and Axonic Strategic
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ALPSSmith and Axonic is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding ALPSSmith Credit Opportunities and Axonic Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axonic Strategic Income and ALPSSmith 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 ALPSSmith Credit Opportunities are associated (or correlated) with Axonic Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axonic Strategic Income has no effect on the direction of ALPSSmith Credit i.e., ALPSSmith Credit and Axonic Strategic go up and down completely randomly.
Pair Corralation between ALPSSmith Credit and Axonic Strategic
Assuming the 90 days horizon ALPSSmith Credit Opportunities is expected to generate 1.17 times more return on investment than Axonic Strategic. However, ALPSSmith Credit is 1.17 times more volatile than Axonic Strategic Income. It trades about 0.08 of its potential returns per unit of risk. Axonic Strategic Income is currently generating about 0.07 per unit of risk. If you would invest 915.00 in ALPSSmith Credit Opportunities on August 24, 2024 and sell it today you would earn a total of 3.00 from holding ALPSSmith Credit Opportunities or generate 0.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALPSSmith Credit Opportunities vs. Axonic Strategic Income
Performance |
| Timeline |
| ALPSSmith Credit Opp |
| Axonic Strategic Income |
ALPSSmith Credit and Axonic Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALPSSmith Credit and Axonic Strategic
The main advantage of trading using opposite ALPSSmith Credit and Axonic Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALPSSmith Credit position performs unexpectedly, Axonic Strategic 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 Axonic Strategic will offset losses from the drop in Axonic Strategic's long position.The idea behind ALPSSmith Credit Opportunities and Axonic Strategic Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Axonic Strategic vs. Capital Group Short | Axonic Strategic vs. Capital Group Municipal | Axonic Strategic vs. Capital Group Global | Axonic Strategic vs. Capital Group Dividend |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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