Correlation Between Tfa Alphagen and Kensington Managed

Can any of the company-specific risk be diversified away by investing in both Tfa Alphagen and Kensington Managed 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 Tfa Alphagen and Kensington Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tfa Alphagen Growth and Kensington Managed Income, you can compare the effects of market volatilities on Tfa Alphagen and Kensington Managed 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 Tfa Alphagen with a short position of Kensington Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tfa Alphagen and Kensington Managed.

Diversification Opportunities for Tfa Alphagen and Kensington Managed

0.7

Correlation Coefficient

Tfa Alphagen  Kensington Managed

Poor diversification

The 3 months correlation between Tfa and Kensington is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Tfa Alphagen Growth and Kensington Managed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kensington Managed Income and Tfa Alphagen 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 Tfa Alphagen Growth are associated (or correlated) with Kensington Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kensington Managed Income has no effect on the direction of Tfa Alphagen i.e., Tfa Alphagen and Kensington Managed go up and down completely randomly.

Pair Corralation between Tfa Alphagen and Kensington Managed

Assuming the 90 days horizon Tfa Alphagen Growth is expected to generate 4.16 times more return on investment than Kensington Managed. However, Tfa Alphagen is 4.16 times more volatile than Kensington Managed Income. It trades about 0.2 of its potential returns per unit of risk. Kensington Managed Income is currently generating about 0.12 per unit of risk. If you would invest  1,044  in Tfa Alphagen Growth on September 12, 2024 and sell it today you would earn a total of  88.00  from holding Tfa Alphagen Growth or generate 8.43% return on investment over 90 days.

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

Tfa Alphagen Growth  vs.  Kensington Managed Income

Tfa Alphagen Growth

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tfa Alphagen Growth are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Tfa Alphagen may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kensington Managed Income

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kensington Managed Income are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Kensington Managed is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tfa Alphagen and Kensington Managed

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

The idea behind Tfa Alphagen Growth and Kensington Managed Income 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.