Correlation Between AfricaRhodium ETF and Alexander Forbes

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

By analyzing existing cross correlation between AfricaRhodium ETF and Alexander Forbes Grp, you can compare the effects of market volatilities on AfricaRhodium ETF and Alexander Forbes 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 AfricaRhodium ETF with a short position of Alexander Forbes. Check out your portfolio center. Please also check ongoing floating volatility patterns of AfricaRhodium ETF and Alexander Forbes.

Diversification Opportunities for AfricaRhodium ETF and Alexander Forbes

0.06

Correlation Coefficient

AfricaRhodium ETF  Alexander Forbes

Significant diversification

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

Pair Corralation between AfricaRhodium ETF and Alexander Forbes

Assuming the 90 days trading horizon AfricaRhodium ETF is expected to under-perform the Alexander Forbes. In addition to that, AfricaRhodium ETF is 1.15 times more volatile than Alexander Forbes Grp. It trades about -0.01 of its total potential returns per unit of risk. Alexander Forbes Grp is currently generating about 0.08 per unit of volatility. If you would invest  72,800  in Alexander Forbes Grp on October 24, 2024 and sell it today you would earn a total of  7,200  from holding Alexander Forbes Grp or generate 9.89% return on investment over 90 days.

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

AfricaRhodium ETF  vs.  Alexander Forbes Grp

AfricaRhodium ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AfricaRhodium ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, AfricaRhodium ETF is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Alexander Forbes Grp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alexander Forbes Grp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Alexander Forbes may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with AfricaRhodium ETF and Alexander Forbes

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

The idea behind AfricaRhodium ETF and Alexander Forbes Grp 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.