Correlation Between Gateway Fund and James Alpha

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

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

Diversification Opportunities for Gateway Fund and James Alpha

1.0

Correlation Coefficient

Gateway Fund  James Alpha

No risk reduction

The 3 months correlation between Gateway and James is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Gateway Fund Class 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 Gateway Fund 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 Gateway Fund Class 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 Gateway Fund i.e., Gateway Fund and James Alpha go up and down completely randomly.

Pair Corralation between Gateway Fund and James Alpha

Assuming the 90 days horizon Gateway Fund is expected to generate 1.01 times less return on investment than James Alpha. But when comparing it to its historical volatility, Gateway Fund Class is 1.06 times less risky than James Alpha. It trades about 0.15 of its potential returns per unit of risk. James Alpha Managed is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  984.00  in James Alpha Managed on September 13, 2024 and sell it today you would earn a total of  352.00  from holding James Alpha Managed or generate 35.77% return on investment over 90 days.

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

Gateway Fund Class  vs.  James Alpha Managed

Gateway Fund Class

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gateway Fund Class are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Gateway Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 Gateway Fund and James Alpha

The main advantage of trading using opposite Gateway Fund and James Alpha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gateway Fund 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 Gateway Fund Class 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.