Correlation Between Strategic Alternatives and Defensive Market
Can any of the company-specific risk be diversified away by investing in both Strategic Alternatives and Defensive Market 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 Strategic Alternatives and Defensive Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Alternatives Fund and Defensive Market Strategies, you can compare the effects of market volatilities on Strategic Alternatives and Defensive Market 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 Strategic Alternatives with a short position of Defensive Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Alternatives and Defensive Market.
Diversification Opportunities for Strategic Alternatives and Defensive Market
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Strategic and Defensive is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Alternatives Fund and Defensive Market Strategies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defensive Market Str and Strategic Alternatives 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 Strategic Alternatives Fund are associated (or correlated) with Defensive Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defensive Market Str has no effect on the direction of Strategic Alternatives i.e., Strategic Alternatives and Defensive Market go up and down completely randomly.
Pair Corralation between Strategic Alternatives and Defensive Market
Assuming the 90 days horizon Strategic Alternatives Fund is expected to generate 0.28 times more return on investment than Defensive Market. However, Strategic Alternatives Fund is 3.57 times less risky than Defensive Market. It trades about 0.17 of its potential returns per unit of risk. Defensive Market Strategies is currently generating about -0.07 per unit of risk. If you would invest 906.00 in Strategic Alternatives Fund on December 30, 2024 and sell it today you would earn a total of 15.00 from holding Strategic Alternatives Fund or generate 1.66% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Strategic Alternatives Fund vs. Defensive Market Strategies
Performance |
Timeline |
Strategic Alternatives |
Defensive Market Str |
Strategic Alternatives and Defensive Market Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Strategic Alternatives and Defensive Market
The main advantage of trading using opposite Strategic Alternatives and Defensive Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Alternatives position performs unexpectedly, Defensive Market 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 Defensive Market will offset losses from the drop in Defensive Market's long position.Strategic Alternatives vs. Deutsche Gold Precious | Strategic Alternatives vs. Gold And Precious | Strategic Alternatives vs. Gamco Global Gold | Strategic Alternatives vs. First Eagle Gold |
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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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