Correlation Between Alpha Architect and Akros Monthly

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

By analyzing existing cross correlation between Alpha Architect Gdsdn and Akros Monthly Payout, you can compare the effects of market volatilities on Alpha Architect and Akros Monthly 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 Alpha Architect with a short position of Akros Monthly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Architect and Akros Monthly.

Diversification Opportunities for Alpha Architect and Akros Monthly

0.88

Correlation Coefficient

Alpha Architect  Akros Monthly

Very poor diversification

The 3 months correlation between Alpha and Akros is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Architect Gdsdn and Akros Monthly Payout in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akros Monthly Payout and Alpha Architect 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 Alpha Architect Gdsdn are associated (or correlated) with Akros Monthly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akros Monthly Payout has no effect on the direction of Alpha Architect i.e., Alpha Architect and Akros Monthly go up and down completely randomly.

Pair Corralation between Alpha Architect and Akros Monthly

Given the investment horizon of 90 days Alpha Architect Gdsdn is expected to generate 0.04 times more return on investment than Akros Monthly. However, Alpha Architect Gdsdn is 22.45 times less risky than Akros Monthly. It trades about 0.1 of its potential returns per unit of risk. Akros Monthly Payout is currently generating about -0.12 per unit of risk. If you would invest  3,130  in Alpha Architect Gdsdn on September 17, 2024 and sell it today you would earn a total of  108.00  from holding Alpha Architect Gdsdn or generate 3.45% return on investment over 90 days.

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

Alpha Architect Gdsdn  vs.  Akros Monthly Payout

Alpha Architect Gdsdn

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Architect Gdsdn are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Alpha Architect is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Akros Monthly Payout

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Akros Monthly Payout has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Pair Trading with Alpha Architect and Akros Monthly

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

The idea behind Alpha Architect Gdsdn and Akros Monthly Payout 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.