Correlation Between Newlake Capital and Alpineome Property

Can any of the company-specific risk be diversified away by investing in both Newlake Capital and Alpineome Property 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 Newlake Capital and Alpineome Property into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Newlake Capital Partners and Alpineome Property Trust, you can compare the effects of market volatilities on Newlake Capital and Alpineome Property 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 Newlake Capital with a short position of Alpineome Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newlake Capital and Alpineome Property.

Diversification Opportunities for Newlake Capital and Alpineome Property

0.31

Correlation Coefficient

Newlake Capital  Alpineome Property

Weak diversification

The 3 months correlation between Newlake and Alpineome is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Newlake Capital Partners and Alpineome Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpineome Property Trust and Newlake Capital 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 Newlake Capital Partners are associated (or correlated) with Alpineome Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpineome Property Trust has no effect on the direction of Newlake Capital i.e., Newlake Capital and Alpineome Property go up and down completely randomly.

Pair Corralation between Newlake Capital and Alpineome Property

Given the investment horizon of 90 days Newlake Capital Partners is expected to generate 1.04 times more return on investment than Alpineome Property. However, Newlake Capital is 1.04 times more volatile than Alpineome Property Trust. It trades about -0.04 of its potential returns per unit of risk. Alpineome Property Trust is currently generating about -0.04 per unit of risk. If you would invest  1,967  in Newlake Capital Partners on September 3, 2024 and sell it today you would lose (73.00) from holding Newlake Capital Partners or give up 3.71% of portfolio value over 90 days.

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

Newlake Capital Partners  vs.  Alpineome Property Trust

Newlake Capital Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newlake Capital Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Newlake Capital is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Alpineome Property Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alpineome Property Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Alpineome Property is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Newlake Capital and Alpineome Property

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

The idea behind Newlake Capital Partners and Alpineome Property 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.