Correlation Between Swan Hedged and Core Alternative
Can any of the company-specific risk be diversified away by investing in both Swan Hedged and Core Alternative 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 Swan Hedged and Core Alternative into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swan Hedged Equity and Core Alternative ETF, you can compare the effects of market volatilities on Swan Hedged and Core Alternative 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 Swan Hedged with a short position of Core Alternative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swan Hedged and Core Alternative.
Diversification Opportunities for Swan Hedged and Core Alternative
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Swan and Core is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Swan Hedged Equity and Core Alternative ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Alternative ETF and Swan Hedged 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 Swan Hedged Equity are associated (or correlated) with Core Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Alternative ETF has no effect on the direction of Swan Hedged i.e., Swan Hedged and Core Alternative go up and down completely randomly.
Pair Corralation between Swan Hedged and Core Alternative
Given the investment horizon of 90 days Swan Hedged Equity is expected to under-perform the Core Alternative. But the etf apears to be less risky and, when comparing its historical volatility, Swan Hedged Equity is 1.12 times less risky than Core Alternative. The etf trades about -0.18 of its potential returns per unit of risk. The Core Alternative ETF is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,609 in Core Alternative ETF on December 5, 2024 and sell it today you would earn a total of 63.00 from holding Core Alternative ETF or generate 2.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Swan Hedged Equity vs. Core Alternative ETF
Performance |
Timeline |
Swan Hedged Equity |
Core Alternative ETF |
Swan Hedged and Core Alternative Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Swan Hedged and Core Alternative
The main advantage of trading using opposite Swan Hedged and Core Alternative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swan Hedged position performs unexpectedly, Core Alternative 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 Core Alternative will offset losses from the drop in Core Alternative's long position.Swan Hedged vs. Amplify BlackSwan Growth | Swan Hedged vs. Invesco SP 500 | Swan Hedged vs. Simplify Exchange Traded | Swan Hedged vs. Simplify Equity PLUS |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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