Correlation Between Cornerstone Strategic and James Alpha

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

By analyzing existing cross correlation between Cornerstone Strategic Value and James Alpha Managed, you can compare the effects of market volatilities on Cornerstone Strategic and James Alpha 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 Cornerstone Strategic with a short position of James Alpha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornerstone Strategic and James Alpha.

Diversification Opportunities for Cornerstone Strategic and James Alpha

0.92

Correlation Coefficient

Cornerstone Strategic  James Alpha

Almost no diversification

The 3 months correlation between Cornerstone and James is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Cornerstone Strategic Value and James Alpha Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James Alpha Managed and Cornerstone Strategic 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 Cornerstone Strategic Value are associated (or correlated) with James Alpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James Alpha Managed has no effect on the direction of Cornerstone Strategic i.e., Cornerstone Strategic and James Alpha go up and down completely randomly.

Pair Corralation between Cornerstone Strategic and James Alpha

Considering the 90-day investment horizon Cornerstone Strategic Value is expected to generate 2.62 times more return on investment than James Alpha. However, Cornerstone Strategic is 2.62 times more volatile than James Alpha Managed. It trades about 0.09 of its potential returns per unit of risk. James Alpha Managed is currently generating about 0.14 per unit of risk. If you would invest  533.00  in Cornerstone Strategic Value on September 13, 2024 and sell it today you would earn a total of  320.00  from holding Cornerstone Strategic Value or generate 60.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.8%
Values	Daily Returns

Cornerstone Strategic Value  vs.  James Alpha Managed

Cornerstone Strategic

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cornerstone Strategic Value are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of very weak essential indicators, Cornerstone Strategic displayed solid returns over the last few months and may actually be approaching a breakup point.

James Alpha Managed

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in James Alpha Managed are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, James Alpha is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cornerstone Strategic and James Alpha

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

The idea behind Cornerstone Strategic Value and James Alpha Managed 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.