Correlation Between Union Street and Alternative Credit
Can any of the company-specific risk be diversified away by investing in both Union Street and Alternative Credit 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 Union Street and Alternative Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Union Street Partners and Alternative Credit Income, you can compare the effects of market volatilities on Union Street and Alternative Credit 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 Union Street with a short position of Alternative Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Street and Alternative Credit.
Diversification Opportunities for Union Street and Alternative Credit
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Union and Alternative is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Union Street Partners and Alternative Credit Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternative Credit Income and Union Street 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 Union Street Partners are associated (or correlated) with Alternative Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternative Credit Income has no effect on the direction of Union Street i.e., Union Street and Alternative Credit go up and down completely randomly.
Pair Corralation between Union Street and Alternative Credit
Assuming the 90 days horizon Union Street Partners is expected to generate 5.71 times more return on investment than Alternative Credit. However, Union Street is 5.71 times more volatile than Alternative Credit Income. It trades about 0.21 of its potential returns per unit of risk. Alternative Credit Income is currently generating about 0.04 per unit of risk. If you would invest 2,878 in Union Street Partners on August 31, 2024 and sell it today you would earn a total of 95.00 from holding Union Street Partners or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Union Street Partners vs. Alternative Credit Income
Performance |
| Timeline |
| Union Street Partners |
| Alternative Credit Income |
Union Street and Alternative Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Street and Alternative Credit
The main advantage of trading using opposite Union Street and Alternative Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Street position performs unexpectedly, Alternative Credit 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 Alternative Credit will offset losses from the drop in Alternative Credit's long position.| Union Street vs. Aqr Sustainable Long Short | Union Street vs. Sterling Capital Short | Union Street vs. Federated Ultrashort Bond | Union Street vs. Barings Active Short |
| Alternative Credit vs. Davis Financial Fund | Alternative Credit vs. Gabelli Global Financial | Alternative Credit vs. Mesirow Financial Small | Alternative Credit vs. Transamerica Financial Life |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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