Correlation Between Strategic Allocation and Acm Dynamic

Can any of the company-specific risk be diversified away by investing in both Strategic Allocation and Acm Dynamic 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 Strategic Allocation and Acm Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Strategic Allocation Moderate and Acm Dynamic Opportunity, you can compare the effects of market volatilities on Strategic Allocation and Acm Dynamic 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 Strategic Allocation with a short position of Acm Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Allocation and Acm Dynamic.

Diversification Opportunities for Strategic Allocation and Acm Dynamic

0.58

Correlation Coefficient

Strategic Allocation  Acm Dynamic

Very weak diversification

The 3 months correlation between Strategic and Acm is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Allocation Moderate and Acm Dynamic Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acm Dynamic Opportunity and Strategic Allocation 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 Strategic Allocation Moderate are associated (or correlated) with Acm Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acm Dynamic Opportunity has no effect on the direction of Strategic Allocation i.e., Strategic Allocation and Acm Dynamic go up and down completely randomly.

Pair Corralation between Strategic Allocation and Acm Dynamic

Assuming the 90 days horizon Strategic Allocation Moderate is expected to under-perform the Acm Dynamic. In addition to that, Strategic Allocation is 1.57 times more volatile than Acm Dynamic Opportunity. It trades about -0.34 of its total potential returns per unit of risk. Acm Dynamic Opportunity is currently generating about 0.11 per unit of volatility. If you would invest  2,153  in Acm Dynamic Opportunity on September 25, 2024 and sell it today you would earn a total of  30.00  from holding Acm Dynamic Opportunity or generate 1.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Strategic Allocation Moderate  vs.  Acm Dynamic Opportunity

Strategic Allocation

Risk-Adjusted Performance

0 of 100

Very Weak

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

Acm Dynamic Opportunity

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Acm Dynamic Opportunity are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Acm Dynamic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Strategic Allocation and Acm Dynamic

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

The idea behind Strategic Allocation Moderate and Acm Dynamic Opportunity 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.