Correlation Between Alternative Investment and Great Northern

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

By analyzing existing cross correlation between Alternative Investment Trust and Great Northern Minerals, you can compare the effects of market volatilities on Alternative Investment and Great Northern 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 Alternative Investment with a short position of Great Northern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alternative Investment and Great Northern.

Diversification Opportunities for Alternative Investment and Great Northern

-0.49

Correlation Coefficient

Alternative Investment  Great Northern

Very good diversification

The 3 months correlation between Alternative and Great is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Alternative Investment Trust and Great Northern Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Northern Minerals and Alternative Investment 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 Alternative Investment Trust are associated (or correlated) with Great Northern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Northern Minerals has no effect on the direction of Alternative Investment i.e., Alternative Investment and Great Northern go up and down completely randomly.

Pair Corralation between Alternative Investment and Great Northern

Assuming the 90 days trading horizon Alternative Investment Trust is expected to generate 0.24 times more return on investment than Great Northern. However, Alternative Investment Trust is 4.24 times less risky than Great Northern. It trades about 0.06 of its potential returns per unit of risk. Great Northern Minerals is currently generating about 0.0 per unit of risk. If you would invest  88.00  in Alternative Investment Trust on September 28, 2024 and sell it today you would earn a total of  56.00  from holding Alternative Investment Trust or generate 63.64% return on investment over 90 days.

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

Alternative Investment Trust  vs.  Great Northern Minerals

Alternative Investment

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alternative Investment Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Alternative Investment is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Great Northern Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great Northern Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Great Northern is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Alternative Investment and Great Northern

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

The idea behind Alternative Investment Trust and Great Northern Minerals 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.