Correlation Between ALPSSmith Credit and TGIF
Can any of the company-specific risk be diversified away by investing in both ALPSSmith Credit and TGIF 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 TGIF 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 TGIF, you can compare the effects of market volatilities on ALPSSmith Credit and TGIF 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 TGIF. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALPSSmith Credit and TGIF.
Diversification Opportunities for ALPSSmith Credit and TGIF
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between ALPSSmith and TGIF is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding ALPSSmith Credit Opportunities and TGIF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TGIF 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 TGIF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TGIF has no effect on the direction of ALPSSmith Credit i.e., ALPSSmith Credit and TGIF go up and down completely randomly.
Pair Corralation between ALPSSmith Credit and TGIF
Assuming the 90 days horizon ALPSSmith Credit is expected to generate 1.45 times less return on investment than TGIF. But when comparing it to its historical volatility, ALPSSmith Credit Opportunities is 1.02 times less risky than TGIF. It trades about 0.14 of its potential returns per unit of risk. TGIF is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 9,404 in TGIF on September 2, 2024 and sell it today you would earn a total of 145.00 from holding TGIF or generate 1.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 7.8% |
| Values | Daily Returns |
ALPSSmith Credit Opportunities vs. TGIF
Performance |
| Timeline |
| ALPSSmith Credit Opp |
| TGIF |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
ALPSSmith Credit and TGIF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALPSSmith Credit and TGIF
The main advantage of trading using opposite ALPSSmith Credit and TGIF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALPSSmith Credit position performs unexpectedly, TGIF 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 TGIF will offset losses from the drop in TGIF's long position.The idea behind ALPSSmith Credit Opportunities and TGIF 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.
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |