Correlation Between ALPSSmith Credit and Anfield Universal

Can any of the company-specific risk be diversified away by investing in both ALPSSmith Credit and Anfield Universal 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 ALPSSmith Credit and Anfield Universal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ALPSSmith Credit Opportunities and Anfield Universal Fixed, you can compare the effects of market volatilities on ALPSSmith Credit and Anfield Universal 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 ALPSSmith Credit with a short position of Anfield Universal. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALPSSmith Credit and Anfield Universal.

Diversification Opportunities for ALPSSmith Credit and Anfield Universal

0.92

Correlation Coefficient

ALPSSmith Credit  Anfield Universal

Almost no diversification

The 3 months correlation between ALPSSmith and Anfield is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding ALPSSmith Credit Opportunities and Anfield Universal Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anfield Universal Fixed and ALPSSmith Credit 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 ALPSSmith Credit Opportunities are associated (or correlated) with Anfield Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anfield Universal Fixed has no effect on the direction of ALPSSmith Credit i.e., ALPSSmith Credit and Anfield Universal go up and down completely randomly.

Pair Corralation between ALPSSmith Credit and Anfield Universal

Assuming the 90 days horizon ALPSSmith Credit is expected to generate 2.12 times less return on investment than Anfield Universal. But when comparing it to its historical volatility, ALPSSmith Credit Opportunities is 1.05 times less risky than Anfield Universal. It trades about 0.06 of its potential returns per unit of risk. Anfield Universal Fixed is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  907.00  in Anfield Universal Fixed on December 30, 2024 and sell it today you would earn a total of  15.00  from holding Anfield Universal Fixed or generate 1.65% return on investment over 90 days.

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

ALPSSmith Credit Opportunities  vs.  Anfield Universal Fixed

ALPSSmith Credit Opp

Risk-Adjusted Performance

Insignificant

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

Anfield Universal Fixed

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Anfield Universal Fixed are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, Anfield Universal is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ALPSSmith Credit and Anfield Universal

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

The idea behind ALPSSmith Credit Opportunities and Anfield Universal Fixed 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.