Correlation Between Core Alternative and ETF Series

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

By analyzing existing cross correlation between Core Alternative ETF and ETF Series Solutions, you can compare the effects of market volatilities on Core Alternative and ETF Series 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 Core Alternative with a short position of ETF Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Alternative and ETF Series.

Diversification Opportunities for Core Alternative and ETF Series

-0.57

Correlation Coefficient

Core Alternative  ETF Series

Excellent diversification

The 3 months correlation between Core and ETF is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Core Alternative ETF and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions and Core Alternative 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 Core Alternative ETF are associated (or correlated) with ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of Core Alternative i.e., Core Alternative and ETF Series go up and down completely randomly.

Pair Corralation between Core Alternative and ETF Series

Given the investment horizon of 90 days Core Alternative is expected to generate 4.9 times less return on investment than ETF Series. In addition to that, Core Alternative is 1.01 times more volatile than ETF Series Solutions. It trades about 0.03 of its total potential returns per unit of risk. ETF Series Solutions is currently generating about 0.14 per unit of volatility. If you would invest  3,311  in ETF Series Solutions on September 2, 2024 and sell it today you would earn a total of  194.00  from holding ETF Series Solutions or generate 5.86% return on investment over 90 days.

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

Core Alternative ETF  vs.  ETF Series Solutions

Core Alternative ETF

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Core Alternative ETF are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Core Alternative is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

ETF Series Solutions

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ETF Series Solutions are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ETF Series is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Core Alternative and ETF Series

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

The idea behind Core Alternative ETF and ETF Series Solutions 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.