Correlation Between Kensington Managed and Tfa Alphagen

Can any of the company-specific risk be diversified away by investing in both Kensington Managed and Tfa Alphagen 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 Kensington Managed and Tfa Alphagen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kensington Managed Income and Tfa Alphagen Growth, you can compare the effects of market volatilities on Kensington Managed and Tfa Alphagen 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 Kensington Managed with a short position of Tfa Alphagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kensington Managed and Tfa Alphagen.

Diversification Opportunities for Kensington Managed and Tfa Alphagen

0.3

Correlation Coefficient

Kensington Managed  Tfa Alphagen

Weak diversification

The 3 months correlation between Kensington and Tfa is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Kensington Managed Income and Tfa Alphagen Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tfa Alphagen Growth and Kensington Managed 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 Kensington Managed Income are associated (or correlated) with Tfa Alphagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tfa Alphagen Growth has no effect on the direction of Kensington Managed i.e., Kensington Managed and Tfa Alphagen go up and down completely randomly.

Pair Corralation between Kensington Managed and Tfa Alphagen

Assuming the 90 days horizon Kensington Managed Income is expected to generate 0.16 times more return on investment than Tfa Alphagen. However, Kensington Managed Income is 6.28 times less risky than Tfa Alphagen. It trades about 0.05 of its potential returns per unit of risk. Tfa Alphagen Growth is currently generating about -0.05 per unit of risk. If you would invest  959.00  in Kensington Managed Income on December 29, 2024 and sell it today you would earn a total of  6.00  from holding Kensington Managed Income or generate 0.63% return on investment over 90 days.

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

Kensington Managed Income  vs.  Tfa Alphagen Growth

Kensington Managed Income

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kensington Managed Income are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Kensington Managed is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Tfa Alphagen Growth

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Kensington Managed and Tfa Alphagen

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

The idea behind Kensington Managed Income and Tfa Alphagen Growth 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.