Correlation Between Atac Inflation and International Stock

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

By analyzing existing cross correlation between Atac Inflation Rotation and International Stock Fund, you can compare the effects of market volatilities on Atac Inflation and International Stock 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 Atac Inflation with a short position of International Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atac Inflation and International Stock.

Diversification Opportunities for Atac Inflation and International Stock

0.06

Correlation Coefficient

Atac Inflation  International Stock

Significant diversification

The 3 months correlation between Atac and International is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Atac Inflation Rotation and International Stock Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Stock and Atac Inflation 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 Atac Inflation Rotation are associated (or correlated) with International Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Stock has no effect on the direction of Atac Inflation i.e., Atac Inflation and International Stock go up and down completely randomly.

Pair Corralation between Atac Inflation and International Stock

Assuming the 90 days horizon Atac Inflation Rotation is expected to under-perform the International Stock. But the mutual fund apears to be less risky and, when comparing its historical volatility, Atac Inflation Rotation is 1.21 times less risky than International Stock. The mutual fund trades about -0.15 of its potential returns per unit of risk. The International Stock Fund is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  2,268  in International Stock Fund on October 27, 2024 and sell it today you would earn a total of  106.00  from holding International Stock Fund or generate 4.67% return on investment over 90 days.

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

Atac Inflation Rotation  vs.  International Stock Fund

Atac Inflation Rotation

Risk-Adjusted Performance

4 of 100

Insignificant

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

International Stock

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Atac Inflation and International Stock

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

The idea behind Atac Inflation Rotation and International Stock Fund 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.