Correlation Between Rational Dynamic and Astor Longshort

Can any of the company-specific risk be diversified away by investing in both Rational Dynamic and Astor Longshort 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 Rational Dynamic and Astor Longshort into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rational Dynamic Momentum and Astor Longshort Fund, you can compare the effects of market volatilities on Rational Dynamic and Astor Longshort 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 Rational Dynamic with a short position of Astor Longshort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rational Dynamic and Astor Longshort.

Diversification Opportunities for Rational Dynamic and Astor Longshort

0.04

Correlation Coefficient

Rational Dynamic  Astor Longshort

Significant diversification

The 3 months correlation between Rational and Astor is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Rational Dynamic Momentum and Astor Longshort Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astor Longshort and Rational Dynamic 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 Rational Dynamic Momentum are associated (or correlated) with Astor Longshort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astor Longshort has no effect on the direction of Rational Dynamic i.e., Rational Dynamic and Astor Longshort go up and down completely randomly.

Pair Corralation between Rational Dynamic and Astor Longshort

Assuming the 90 days horizon Rational Dynamic is expected to generate 8.88 times less return on investment than Astor Longshort. In addition to that, Rational Dynamic is 1.66 times more volatile than Astor Longshort Fund. It trades about 0.01 of its total potential returns per unit of risk. Astor Longshort Fund is currently generating about 0.17 per unit of volatility. If you would invest  1,370  in Astor Longshort Fund on September 16, 2024 and sell it today you would earn a total of  51.00  from holding Astor Longshort Fund or generate 3.72% return on investment over 90 days.

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

Rational Dynamic Momentum  vs.  Astor Longshort Fund

Rational Dynamic Momentum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rational Dynamic Momentum has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Rational Dynamic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Astor Longshort

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Astor Longshort Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Astor Longshort is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rational Dynamic and Astor Longshort

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

The idea behind Rational Dynamic Momentum and Astor Longshort Fund 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.