Correlation Between Astor Longshort and The Short

Can any of the company-specific risk be diversified away by investing in both Astor Longshort and The Short 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 Astor Longshort and The Short into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Astor Longshort Fund and The Short Term, you can compare the effects of market volatilities on Astor Longshort and The Short 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 Astor Longshort with a short position of The Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astor Longshort and The Short.

Diversification Opportunities for Astor Longshort and The Short

-0.44

Correlation Coefficient

Astor Longshort  The Short

Very good diversification

The 3 months correlation between Astor and The is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Astor Longshort Fund and The Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Term and Astor Longshort 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 Astor Longshort Fund are associated (or correlated) with The Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Term has no effect on the direction of Astor Longshort i.e., Astor Longshort and The Short go up and down completely randomly.

Pair Corralation between Astor Longshort and The Short

Assuming the 90 days horizon Astor Longshort Fund is expected to under-perform the The Short. In addition to that, Astor Longshort is 4.07 times more volatile than The Short Term. It trades about -0.02 of its total potential returns per unit of risk. The Short Term is currently generating about 0.2 per unit of volatility. If you would invest  1,594  in The Short Term on December 28, 2024 and sell it today you would earn a total of  24.00  from holding The Short Term or generate 1.51% return on investment over 90 days.

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

Astor Longshort Fund  vs.  The Short Term

Astor Longshort

Risk-Adjusted Performance

Very Weak

Over the last 90 days Astor Longshort Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Astor Longshort is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Short Term

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Short Term are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, The Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Astor Longshort and The Short

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

The idea behind Astor Longshort Fund and The Short Term 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.