Correlation Between LHA Market and AltShares Trust

Can any of the company-specific risk be diversified away by investing in both LHA Market and AltShares Trust 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 LHA Market and AltShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for LHA Market and AltShares Trust

-0.36

Correlation Coefficient

LHA Market  AltShares Trust

Very good diversification

The 3 months correlation between LHA and AltShares is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding LHA Market State and AltShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AltShares Trust and LHA Market 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 LHA Market State are associated (or correlated) with AltShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AltShares Trust has no effect on the direction of LHA Market i.e., LHA Market and AltShares Trust go up and down completely randomly.

Pair Corralation between LHA Market and AltShares Trust

Given the investment horizon of 90 days LHA Market State is expected to generate 1.87 times more return on investment than AltShares Trust. However, LHA Market is 1.87 times more volatile than AltShares Trust . It trades about 0.04 of its potential returns per unit of risk. AltShares Trust is currently generating about 0.0 per unit of risk. If you would invest  2,219  in LHA Market State on September 13, 2024 and sell it today you would earn a total of  22.00  from holding LHA Market State or generate 0.99% return on investment over 90 days.

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

LHA Market State  vs.  AltShares Trust

LHA Market State

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LHA Market State are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, LHA Market is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

AltShares Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AltShares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, AltShares Trust is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with LHA Market and AltShares Trust

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

The idea behind LHA Market State and AltShares 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.