Correlation Between Gurtin California and Alphacentric Hedged

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

By analyzing existing cross correlation between Gurtin California Municipal and Alphacentric Hedged Market, you can compare the effects of market volatilities on Gurtin California and Alphacentric Hedged 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 Gurtin California with a short position of Alphacentric Hedged. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gurtin California and Alphacentric Hedged.

Diversification Opportunities for Gurtin California and Alphacentric Hedged

0.63

Correlation Coefficient

Gurtin California  Alphacentric Hedged

Poor diversification

The 3 months correlation between Gurtin and Alphacentric is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Gurtin California Municipal and Alphacentric Hedged Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphacentric Hedged and Gurtin California 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 Gurtin California Municipal are associated (or correlated) with Alphacentric Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphacentric Hedged has no effect on the direction of Gurtin California i.e., Gurtin California and Alphacentric Hedged go up and down completely randomly.

Pair Corralation between Gurtin California and Alphacentric Hedged

Assuming the 90 days horizon Gurtin California Municipal is expected to under-perform the Alphacentric Hedged. But the mutual fund apears to be less risky and, when comparing its historical volatility, Gurtin California Municipal is 3.68 times less risky than Alphacentric Hedged. The mutual fund trades about -0.41 of its potential returns per unit of risk. The Alphacentric Hedged Market is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  2,850  in Alphacentric Hedged Market on October 11, 2024 and sell it today you would lose (47.00) from holding Alphacentric Hedged Market or give up 1.65% of portfolio value over 90 days.

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

Gurtin California Municipal  vs.  Alphacentric Hedged Market

Gurtin California

Risk-Adjusted Performance

0 of 100

Very Weak

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

Alphacentric Hedged

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Gurtin California and Alphacentric Hedged

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

The idea behind Gurtin California Municipal and Alphacentric Hedged Market 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.