Correlation Between Assetmix and Allan Gray

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

By analyzing existing cross correlation between Assetmix Ci Balanced and Allan Gray Equity, you can compare the effects of market volatilities on Assetmix and Allan Gray 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 Assetmix with a short position of Allan Gray. Check out your portfolio center. Please also check ongoing floating volatility patterns of Assetmix and Allan Gray.

Diversification Opportunities for Assetmix and Allan Gray

0.93

Correlation Coefficient

Assetmix  Allan Gray

Almost no diversification

The 3 months correlation between Assetmix and Allan is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Assetmix Ci Balanced and Allan Gray Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allan Gray Equity and Assetmix 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 Assetmix Ci Balanced are associated (or correlated) with Allan Gray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allan Gray Equity has no effect on the direction of Assetmix i.e., Assetmix and Allan Gray go up and down completely randomly.

Pair Corralation between Assetmix and Allan Gray

Assuming the 90 days trading horizon Assetmix is expected to generate 1.07 times less return on investment than Allan Gray. But when comparing it to its historical volatility, Assetmix Ci Balanced is 1.14 times less risky than Allan Gray. It trades about 0.17 of its potential returns per unit of risk. Allan Gray Equity is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  58,751  in Allan Gray Equity on September 4, 2024 and sell it today you would earn a total of  2,786  from holding Allan Gray Equity or generate 4.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

Assetmix Ci Balanced  vs.  Allan Gray Equity

Assetmix Ci Balanced

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Assetmix Ci Balanced are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Assetmix is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Allan Gray Equity

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allan Gray Equity are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong basic indicators, Allan Gray is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Assetmix and Allan Gray

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

The idea behind Assetmix Ci Balanced and Allan Gray Equity 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.