Correlation Between Anchor Tactical and Anchor Risk

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

By analyzing existing cross correlation between Anchor Tactical Credit and Anchor Risk Managed, you can compare the effects of market volatilities on Anchor Tactical and Anchor Risk 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 Anchor Tactical with a short position of Anchor Risk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anchor Tactical and Anchor Risk.

Diversification Opportunities for Anchor Tactical and Anchor Risk

0.22

Correlation Coefficient

Anchor Tactical  Anchor Risk

Modest diversification

The 3 months correlation between Anchor and Anchor is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Anchor Tactical Credit and Anchor Risk Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anchor Risk Managed and Anchor Tactical 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 Anchor Tactical Credit are associated (or correlated) with Anchor Risk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anchor Risk Managed has no effect on the direction of Anchor Tactical i.e., Anchor Tactical and Anchor Risk go up and down completely randomly.

Pair Corralation between Anchor Tactical and Anchor Risk

Assuming the 90 days horizon Anchor Tactical Credit is expected to under-perform the Anchor Risk. But the mutual fund apears to be less risky and, when comparing its historical volatility, Anchor Tactical Credit is 1.14 times less risky than Anchor Risk. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Anchor Risk Managed is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,026  in Anchor Risk Managed on December 2, 2024 and sell it today you would earn a total of  2.00  from holding Anchor Risk Managed or generate 0.19% return on investment over 90 days.

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

Anchor Tactical Credit  vs.  Anchor Risk Managed

Anchor Tactical Credit

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Anchor Tactical Credit are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Anchor Tactical showed solid returns over the last few months and may actually be approaching a breakup point.

Anchor Risk Managed

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Anchor Tactical and Anchor Risk

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

The idea behind Anchor Tactical Credit and Anchor Risk Managed 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.