Correlation Between SmartETFs Asia and Adaptive Alpha

Can any of the company-specific risk be diversified away by investing in both SmartETFs Asia and Adaptive Alpha 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 SmartETFs Asia and Adaptive Alpha into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SmartETFs Asia Pacific and Adaptive Alpha Opportunities, you can compare the effects of market volatilities on SmartETFs Asia and Adaptive Alpha 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 SmartETFs Asia with a short position of Adaptive Alpha. Check out your portfolio center. Please also check ongoing floating volatility patterns of SmartETFs Asia and Adaptive Alpha.

Diversification Opportunities for SmartETFs Asia and Adaptive Alpha

0.52

Correlation Coefficient

SmartETFs Asia  Adaptive Alpha

Very weak diversification

The 3 months correlation between SmartETFs and Adaptive is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding SmartETFs Asia Pacific and Adaptive Alpha Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adaptive Alpha Oppor and SmartETFs Asia 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 SmartETFs Asia Pacific are associated (or correlated) with Adaptive Alpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adaptive Alpha Oppor has no effect on the direction of SmartETFs Asia i.e., SmartETFs Asia and Adaptive Alpha go up and down completely randomly.

Pair Corralation between SmartETFs Asia and Adaptive Alpha

Given the investment horizon of 90 days SmartETFs Asia is expected to generate 1.69 times less return on investment than Adaptive Alpha. In addition to that, SmartETFs Asia is 1.32 times more volatile than Adaptive Alpha Opportunities. It trades about 0.06 of its total potential returns per unit of risk. Adaptive Alpha Opportunities is currently generating about 0.12 per unit of volatility. If you would invest  2,771  in Adaptive Alpha Opportunities on September 5, 2024 and sell it today you would earn a total of  229.00  from holding Adaptive Alpha Opportunities or generate 8.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

SmartETFs Asia Pacific  vs.  Adaptive Alpha Opportunities

SmartETFs Asia Pacific

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SmartETFs Asia Pacific are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable forward indicators, SmartETFs Asia is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Adaptive Alpha Oppor

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Adaptive Alpha Opportunities are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Adaptive Alpha may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SmartETFs Asia and Adaptive Alpha

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

The idea behind SmartETFs Asia Pacific and Adaptive Alpha Opportunities 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.