Correlation Between Anfield Equity and Absolute Core

Can any of the company-specific risk be diversified away by investing in both Anfield Equity and Absolute Core 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 Anfield Equity and Absolute Core into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Anfield Equity Sector and Absolute Core Strategy, you can compare the effects of market volatilities on Anfield Equity and Absolute Core 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 Anfield Equity with a short position of Absolute Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anfield Equity and Absolute Core.

Diversification Opportunities for Anfield Equity and Absolute Core

0.53

Correlation Coefficient

Anfield Equity  Absolute Core

Very weak diversification

The 3 months correlation between Anfield and Absolute is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Anfield Equity Sector and Absolute Core Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Core Strategy and Anfield Equity 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 Anfield Equity Sector are associated (or correlated) with Absolute Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Core Strategy has no effect on the direction of Anfield Equity i.e., Anfield Equity and Absolute Core go up and down completely randomly.

Pair Corralation between Anfield Equity and Absolute Core

Given the investment horizon of 90 days Anfield Equity Sector is expected to under-perform the Absolute Core. In addition to that, Anfield Equity is 1.74 times more volatile than Absolute Core Strategy. It trades about -0.03 of its total potential returns per unit of risk. Absolute Core Strategy is currently generating about -0.01 per unit of volatility. If you would invest  3,259  in Absolute Core Strategy on September 12, 2024 and sell it today you would lose (4.00) from holding Absolute Core Strategy or give up 0.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Anfield Equity Sector  vs.  Absolute Core Strategy

Anfield Equity Sector

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Anfield Equity Sector are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Anfield Equity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Absolute Core Strategy

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Anfield Equity and Absolute Core

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

The idea behind Anfield Equity Sector and Absolute Core Strategy 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.