Correlation Between Associated Capital and Strats SM

Can any of the company-specific risk be diversified away by investing in both Associated Capital and Strats SM 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 Associated Capital and Strats SM into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Associated Capital Group and Strats SM Trust, you can compare the effects of market volatilities on Associated Capital and Strats SM 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 Associated Capital with a short position of Strats SM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Capital and Strats SM.

Diversification Opportunities for Associated Capital and Strats SM

0.42

Correlation Coefficient

Associated Capital  Strats SM

Very weak diversification

The 3 months correlation between Associated and Strats is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and Strats SM Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strats SM Trust and Associated Capital 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 Associated Capital Group are associated (or correlated) with Strats SM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strats SM Trust has no effect on the direction of Associated Capital i.e., Associated Capital and Strats SM go up and down completely randomly.

Pair Corralation between Associated Capital and Strats SM

Allowing for the 90-day total investment horizon Associated Capital Group is expected to generate 2.54 times more return on investment than Strats SM. However, Associated Capital is 2.54 times more volatile than Strats SM Trust. It trades about 0.03 of its potential returns per unit of risk. Strats SM Trust is currently generating about 0.02 per unit of risk. If you would invest  3,545  in Associated Capital Group on December 20, 2024 and sell it today you would earn a total of  76.00  from holding Associated Capital Group or generate 2.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	83.33%
Values	Daily Returns

Associated Capital Group  vs.  Strats SM Trust

Associated Capital

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Associated Capital Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Associated Capital is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Strats SM Trust

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Strats SM Trust are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward-looking indicators, Strats SM is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Associated Capital and Strats SM

The main advantage of trading using opposite Associated Capital and Strats SM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated Capital position performs unexpectedly, Strats SM 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 Strats SM will offset losses from the drop in Strats SM's long position.

The idea behind Associated Capital Group and Strats SM Trust 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.