Correlation Between Alpine Dynamic and Utilities Fund

Can any of the company-specific risk be diversified away by investing in both Alpine Dynamic and Utilities Fund 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 Alpine Dynamic and Utilities Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alpine Dynamic Dividend and Utilities Fund Investor, you can compare the effects of market volatilities on Alpine Dynamic and Utilities Fund 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 Alpine Dynamic with a short position of Utilities Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpine Dynamic and Utilities Fund.

Diversification Opportunities for Alpine Dynamic and Utilities Fund

0.79

Correlation Coefficient

Alpine Dynamic  Utilities Fund

Poor diversification

The 3 months correlation between Alpine and Utilities is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Alpine Dynamic Dividend and Utilities Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utilities Fund Investor and Alpine Dynamic 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 Alpine Dynamic Dividend are associated (or correlated) with Utilities Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utilities Fund Investor has no effect on the direction of Alpine Dynamic i.e., Alpine Dynamic and Utilities Fund go up and down completely randomly.

Pair Corralation between Alpine Dynamic and Utilities Fund

Assuming the 90 days horizon Alpine Dynamic is expected to generate 2.27 times less return on investment than Utilities Fund. But when comparing it to its historical volatility, Alpine Dynamic Dividend is 1.57 times less risky than Utilities Fund. It trades about 0.04 of its potential returns per unit of risk. Utilities Fund Investor is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,768  in Utilities Fund Investor on December 23, 2024 and sell it today you would earn a total of  66.00  from holding Utilities Fund Investor or generate 3.73% return on investment over 90 days.

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

Alpine Dynamic Dividend  vs.  Utilities Fund Investor

Alpine Dynamic Dividend

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alpine Dynamic Dividend are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Alpine Dynamic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Utilities Fund Investor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Utilities Fund Investor are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Utilities Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alpine Dynamic and Utilities Fund

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

The idea behind Alpine Dynamic Dividend and Utilities Fund Investor 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.