Correlation Between Astar and Performance Trust

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

By analyzing existing cross correlation between Astar and Performance Trust Municipal, you can compare the effects of market volatilities on Astar and Performance Trust 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 Performance Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and Performance Trust.

Diversification Opportunities for Astar and Performance Trust

0.63

Correlation Coefficient

Astar  Performance Trust

Poor diversification

The 3 months correlation between Astar and Performance is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Performance Trust Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Trust 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 Performance Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Trust has no effect on the direction of Astar i.e., Astar and Performance Trust go up and down completely randomly.

Pair Corralation between Astar and Performance Trust

Assuming the 90 days trading horizon Astar is expected to under-perform the Performance Trust. In addition to that, Astar is 18.01 times more volatile than Performance Trust Municipal. It trades about -0.11 of its total potential returns per unit of risk. Performance Trust Municipal is currently generating about -0.04 per unit of volatility. If you would invest  2,263  in Performance Trust Municipal on October 26, 2024 and sell it today you would lose (4.00) from holding Performance Trust Municipal or give up 0.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	86.36%
Values	Daily Returns

Astar  vs.  Performance Trust Municipal

Astar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Astar is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Performance Trust

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Astar and Performance Trust

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

The idea behind Astar and Performance Trust Municipal 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.