Correlation Between Astar and Zacks All

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

By analyzing existing cross correlation between Astar and Zacks All Cap Core, you can compare the effects of market volatilities on Astar and Zacks All 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 Astar with a short position of Zacks All. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and Zacks All.

Diversification Opportunities for Astar and Zacks All

0.4

Correlation Coefficient

Astar  Zacks All

Very weak diversification

The 3 months correlation between Astar and Zacks is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Zacks All Cap Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zacks All Cap and Astar 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 Astar are associated (or correlated) with Zacks All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zacks All Cap has no effect on the direction of Astar i.e., Astar and Zacks All go up and down completely randomly.

Pair Corralation between Astar and Zacks All

Assuming the 90 days trading horizon Astar is expected to generate 6.21 times more return on investment than Zacks All. However, Astar is 6.21 times more volatile than Zacks All Cap Core. It trades about 0.04 of its potential returns per unit of risk. Zacks All Cap Core is currently generating about 0.02 per unit of risk. If you would invest  4.70  in Astar on October 11, 2024 and sell it today you would earn a total of  1.42  from holding Astar or generate 30.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	60.0%
Values	Daily Returns

Astar  vs.  Zacks All Cap Core

Astar

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astar are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Astar may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Zacks All Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zacks All Cap Core has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Astar and Zacks All

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

The idea behind Astar and Zacks All Cap Core 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.