Correlation Between Alphacentric Hedged and The Growth

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

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

Diversification Opportunities for Alphacentric Hedged and The Growth

0.97

Correlation Coefficient

Alphacentric Hedged  The Growth

Almost no diversification

The 3 months correlation between Alphacentric and The is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Alphacentric Hedged Market and The Growth Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Equity and Alphacentric 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 Alphacentric Hedged Market are associated (or correlated) with The Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Equity has no effect on the direction of Alphacentric Hedged i.e., Alphacentric Hedged and The Growth go up and down completely randomly.

Pair Corralation between Alphacentric Hedged and The Growth

Assuming the 90 days horizon Alphacentric Hedged is expected to generate 1.78 times less return on investment than The Growth. But when comparing it to its historical volatility, Alphacentric Hedged Market is 1.32 times less risky than The Growth. It trades about 0.07 of its potential returns per unit of risk. The Growth Equity is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,964  in The Growth Equity on October 26, 2024 and sell it today you would earn a total of  62.00  from holding The Growth Equity or generate 1.56% return on investment over 90 days.

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

Alphacentric Hedged Market  vs.  The Growth Equity

Alphacentric Hedged

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alphacentric Hedged Market are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. 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.

Growth Equity

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Growth Equity are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, The Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alphacentric Hedged and The Growth

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

The idea behind Alphacentric Hedged Market and The Growth Equity 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.