Correlation Between Flagship Investments and Alternative Investment

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

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

Diversification Opportunities for Flagship Investments and Alternative Investment

0.38

Correlation Coefficient

Flagship Investments  Alternative Investment

Weak diversification

The 3 months correlation between Flagship and Alternative is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Flagship Investments and Alternative Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternative Investment and Flagship Investments 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 Flagship Investments are associated (or correlated) with Alternative Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternative Investment has no effect on the direction of Flagship Investments i.e., Flagship Investments and Alternative Investment go up and down completely randomly.

Pair Corralation between Flagship Investments and Alternative Investment

Assuming the 90 days trading horizon Flagship Investments is expected to generate 1.69 times less return on investment than Alternative Investment. But when comparing it to its historical volatility, Flagship Investments is 1.15 times less risky than Alternative Investment. It trades about 0.1 of its potential returns per unit of risk. Alternative Investment Trust is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  125.00  in Alternative Investment Trust on September 2, 2024 and sell it today you would earn a total of  19.00  from holding Alternative Investment Trust or generate 15.2% return on investment over 90 days.

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

Flagship Investments  vs.  Alternative Investment Trust

Flagship Investments

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flagship Investments are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Flagship Investments may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Alternative Investment

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alternative Investment Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alternative Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Flagship Investments and Alternative Investment

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

The idea behind Flagship Investments and Alternative Investment Trust 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 Stocks Directory module to find actively traded stocks across global markets.