Correlation Between Anchor Tactical and Tactical Growth

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

By analyzing existing cross correlation between Anchor Tactical Equity and Tactical Growth Allocation, you can compare the effects of market volatilities on Anchor Tactical and Tactical Growth 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 Tactical Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anchor Tactical and Tactical Growth.

Diversification Opportunities for Anchor Tactical and Tactical Growth

0.92

Correlation Coefficient

Anchor Tactical  Tactical Growth

Almost no diversification

The 3 months correlation between Anchor and Tactical is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Anchor Tactical Equity and Tactical Growth Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tactical Growth Allo 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 Equity are associated (or correlated) with Tactical Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tactical Growth Allo has no effect on the direction of Anchor Tactical i.e., Anchor Tactical and Tactical Growth go up and down completely randomly.

Pair Corralation between Anchor Tactical and Tactical Growth

Assuming the 90 days horizon Anchor Tactical Equity is expected to generate 0.57 times more return on investment than Tactical Growth. However, Anchor Tactical Equity is 1.77 times less risky than Tactical Growth. It trades about -0.12 of its potential returns per unit of risk. Tactical Growth Allocation is currently generating about -0.11 per unit of risk. If you would invest  1,461  in Anchor Tactical Equity on December 30, 2024 and sell it today you would lose (67.00) from holding Anchor Tactical Equity or give up 4.59% of portfolio value over 90 days.

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

Anchor Tactical Equity  vs.  Tactical Growth Allocation

Anchor Tactical Equity

Risk-Adjusted Performance

Very Weak

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

Tactical Growth Allo

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tactical Growth Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental 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 Anchor Tactical and Tactical Growth

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

The idea behind Anchor Tactical Equity and Tactical Growth Allocation 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.