Correlation Between Alpha Architect and Keating Active

Can any of the company-specific risk be diversified away by investing in both Alpha Architect and Keating Active 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 Alpha Architect and Keating Active into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alpha Architect Value and Keating Active ETF, you can compare the effects of market volatilities on Alpha Architect and Keating Active 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 Alpha Architect with a short position of Keating Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Architect and Keating Active.

Diversification Opportunities for Alpha Architect and Keating Active

0.3

Correlation Coefficient

Alpha Architect  Keating Active

Weak diversification

The 3 months correlation between Alpha and Keating is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Architect Value and Keating Active ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keating Active ETF and Alpha Architect 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 Alpha Architect Value are associated (or correlated) with Keating Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keating Active ETF has no effect on the direction of Alpha Architect i.e., Alpha Architect and Keating Active go up and down completely randomly.

Pair Corralation between Alpha Architect and Keating Active

Given the investment horizon of 90 days Alpha Architect is expected to generate 2.81 times less return on investment than Keating Active. In addition to that, Alpha Architect is 1.37 times more volatile than Keating Active ETF. It trades about 0.01 of its total potential returns per unit of risk. Keating Active ETF is currently generating about 0.03 per unit of volatility. If you would invest  2,633  in Keating Active ETF on September 14, 2024 and sell it today you would earn a total of  7.70  from holding Keating Active ETF or generate 0.29% return on investment over 90 days.

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

Alpha Architect Value  vs.  Keating Active ETF

Alpha Architect Value

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Architect Value are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Alpha Architect is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Keating Active ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keating Active ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Keating Active is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Alpha Architect and Keating Active

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

The idea behind Alpha Architect Value and Keating Active ETF 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.