Correlation Between Alphacentric Symmetry and Index Fund

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

By analyzing existing cross correlation between Alphacentric Symmetry Strategy and Index Fund Class, you can compare the effects of market volatilities on Alphacentric Symmetry and Index Fund 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 Symmetry with a short position of Index Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphacentric Symmetry and Index Fund.

Diversification Opportunities for Alphacentric Symmetry and Index Fund

0.75

Correlation Coefficient

Alphacentric Symmetry  Index Fund

Poor diversification

The 3 months correlation between Alphacentric and Index is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Alphacentric Symmetry Strategy and Index Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Index Fund Class and Alphacentric Symmetry 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 Symmetry Strategy are associated (or correlated) with Index Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Index Fund Class has no effect on the direction of Alphacentric Symmetry i.e., Alphacentric Symmetry and Index Fund go up and down completely randomly.

Pair Corralation between Alphacentric Symmetry and Index Fund

Assuming the 90 days horizon Alphacentric Symmetry Strategy is expected to generate 0.53 times more return on investment than Index Fund. However, Alphacentric Symmetry Strategy is 1.89 times less risky than Index Fund. It trades about -0.1 of its potential returns per unit of risk. Index Fund Class is currently generating about -0.08 per unit of risk. If you would invest  1,239  in Alphacentric Symmetry Strategy on December 22, 2024 and sell it today you would lose (40.00) from holding Alphacentric Symmetry Strategy or give up 3.23% of portfolio value over 90 days.

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

Alphacentric Symmetry Strategy  vs.  Index Fund Class

Alphacentric Symmetry

Risk-Adjusted Performance

Very Weak

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

Index Fund Class

Risk-Adjusted Performance

Very Weak

Over the last 90 days Index Fund Class has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Index Fund 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 Symmetry and Index Fund

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

The idea behind Alphacentric Symmetry Strategy and Index Fund Class 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.