Correlation Between Fairlead Tactical and ATAC Rotation

Can any of the company-specific risk be diversified away by investing in both Fairlead Tactical and ATAC Rotation 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 Fairlead Tactical and ATAC Rotation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fairlead Tactical Sector and ATAC Rotation ETF, you can compare the effects of market volatilities on Fairlead Tactical and ATAC Rotation 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 Fairlead Tactical with a short position of ATAC Rotation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairlead Tactical and ATAC Rotation.

Diversification Opportunities for Fairlead Tactical and ATAC Rotation

0.78

Correlation Coefficient

Fairlead Tactical  ATAC Rotation

Poor diversification

The 3 months correlation between Fairlead and ATAC is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Fairlead Tactical Sector and ATAC Rotation ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATAC Rotation ETF and Fairlead Tactical 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 Fairlead Tactical Sector are associated (or correlated) with ATAC Rotation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATAC Rotation ETF has no effect on the direction of Fairlead Tactical i.e., Fairlead Tactical and ATAC Rotation go up and down completely randomly.

Pair Corralation between Fairlead Tactical and ATAC Rotation

Given the investment horizon of 90 days Fairlead Tactical Sector is expected to generate 0.8 times more return on investment than ATAC Rotation. However, Fairlead Tactical Sector is 1.24 times less risky than ATAC Rotation. It trades about -0.22 of its potential returns per unit of risk. ATAC Rotation ETF is currently generating about -0.38 per unit of risk. If you would invest  2,848  in Fairlead Tactical Sector on October 8, 2024 and sell it today you would lose (92.00) from holding Fairlead Tactical Sector 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

Fairlead Tactical Sector  vs.  ATAC Rotation ETF

Fairlead Tactical Sector

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fairlead Tactical Sector has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Fairlead Tactical is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

ATAC Rotation ETF

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ATAC Rotation ETF are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, ATAC Rotation is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Fairlead Tactical and ATAC Rotation

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

The idea behind Fairlead Tactical Sector and ATAC Rotation ETF 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.