Correlation Between AlphaMark Actively and IShares Core

Can any of the company-specific risk be diversified away by investing in both AlphaMark Actively and IShares Core 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 AlphaMark Actively and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AlphaMark Actively Managed and iShares Core SP, you can compare the effects of market volatilities on AlphaMark Actively and IShares Core 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 AlphaMark Actively with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of AlphaMark Actively and IShares Core.

Diversification Opportunities for AlphaMark Actively and IShares Core

-0.04

Correlation Coefficient

AlphaMark Actively  IShares Core

Good diversification

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

Pair Corralation between AlphaMark Actively and IShares Core

Given the investment horizon of 90 days AlphaMark Actively Managed is expected to generate 106.31 times more return on investment than IShares Core. However, AlphaMark Actively is 106.31 times more volatile than iShares Core SP. It trades about 0.13 of its potential returns per unit of risk. iShares Core SP is currently generating about 0.01 per unit of risk. If you would invest  231.00  in AlphaMark Actively Managed on September 23, 2024 and sell it today you would earn a total of  3,036  from holding AlphaMark Actively Managed or generate 1314.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

AlphaMark Actively Managed  vs.  iShares Core SP

AlphaMark Actively

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AlphaMark Actively Managed are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent fundamental indicators, AlphaMark Actively reported solid returns over the last few months and may actually be approaching a breakup point.

iShares Core SP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Core SP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking indicators, IShares Core is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with AlphaMark Actively and IShares Core

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

The idea behind AlphaMark Actively Managed and iShares Core SP 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.