Correlation Between Alpine Ultra and Keeley Small-mid

Can any of the company-specific risk be diversified away by investing in both Alpine Ultra and Keeley Small-mid 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 Alpine Ultra and Keeley Small-mid into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alpine Ultra Short and Keeley Small Mid Cap, you can compare the effects of market volatilities on Alpine Ultra and Keeley Small-mid 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 Alpine Ultra with a short position of Keeley Small-mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpine Ultra and Keeley Small-mid.

Diversification Opportunities for Alpine Ultra and Keeley Small-mid

-0.84

Correlation Coefficient

Alpine Ultra  Keeley Small-mid

Pay attention - limited upside

The 3 months correlation between Alpine and Keeley is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Alpine Ultra Short and Keeley Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keeley Small Mid and Alpine Ultra 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 Alpine Ultra Short are associated (or correlated) with Keeley Small-mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keeley Small Mid has no effect on the direction of Alpine Ultra i.e., Alpine Ultra and Keeley Small-mid go up and down completely randomly.

Pair Corralation between Alpine Ultra and Keeley Small-mid

Assuming the 90 days horizon Alpine Ultra Short is expected to generate 0.03 times more return on investment than Keeley Small-mid. However, Alpine Ultra Short is 36.07 times less risky than Keeley Small-mid. It trades about 0.22 of its potential returns per unit of risk. Keeley Small Mid Cap is currently generating about -0.14 per unit of risk. If you would invest  1,002  in Alpine Ultra Short on December 20, 2024 and sell it today you would earn a total of  7.00  from holding Alpine Ultra Short or generate 0.7% return on investment over 90 days.

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

Alpine Ultra Short  vs.  Keeley Small Mid Cap

Alpine Ultra Short

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alpine Ultra Short are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Alpine Ultra is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Keeley Small Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Keeley Small Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Alpine Ultra and Keeley Small-mid

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

The idea behind Alpine Ultra Short and Keeley Small Mid Cap 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.