Correlation Between Brigade High and ALPSSmith Balanced

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

By analyzing existing cross correlation between Brigade High Income and ALPSSmith Balanced Opportunity, you can compare the effects of market volatilities on Brigade High and ALPSSmith Balanced 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 Brigade High with a short position of ALPSSmith Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brigade High and ALPSSmith Balanced.

Diversification Opportunities for Brigade High and ALPSSmith Balanced

0.1

Correlation Coefficient

Brigade High  ALPSSmith Balanced

Average diversification

The 3 months correlation between Brigade and ALPSSmith is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Brigade High Income and ALPSSmith Balanced Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALPSSmith Balanced and Brigade High 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 Brigade High Income are associated (or correlated) with ALPSSmith Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALPSSmith Balanced has no effect on the direction of Brigade High i.e., Brigade High and ALPSSmith Balanced go up and down completely randomly.

Pair Corralation between Brigade High and ALPSSmith Balanced

Assuming the 90 days horizon Brigade High Income is expected to generate 0.29 times more return on investment than ALPSSmith Balanced. However, Brigade High Income is 3.45 times less risky than ALPSSmith Balanced. It trades about 0.08 of its potential returns per unit of risk. ALPSSmith Balanced Opportunity is currently generating about -0.06 per unit of risk. If you would invest  993.00  in Brigade High Income on December 30, 2024 and sell it today you would earn a total of  9.00  from holding Brigade High Income or generate 0.91% return on investment over 90 days.

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

Brigade High Income  vs.  ALPSSmith Balanced Opportunity

Brigade High Income

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brigade High Income are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, Brigade High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ALPSSmith Balanced

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALPSSmith Balanced Opportunity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, ALPSSmith Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Brigade High and ALPSSmith Balanced

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

The idea behind Brigade High Income and ALPSSmith Balanced Opportunity 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 Transaction History module to view history of all your transactions and understand their impact on performance.