Correlation Between Alternative Asset and Global Absolute
Can any of the company-specific risk be diversified away by investing in both Alternative Asset and Global Absolute 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 Alternative Asset and Global Absolute into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alternative Asset Allocation and Global Absolute Return, you can compare the effects of market volatilities on Alternative Asset and Global Absolute 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 Alternative Asset with a short position of Global Absolute. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alternative Asset and Global Absolute.
Diversification Opportunities for Alternative Asset and Global Absolute
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alternative and Global is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Alternative Asset Allocation and Global Absolute Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Absolute Return and Alternative Asset 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 Alternative Asset Allocation are associated (or correlated) with Global Absolute. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Absolute Return has no effect on the direction of Alternative Asset i.e., Alternative Asset and Global Absolute go up and down completely randomly.
Pair Corralation between Alternative Asset and Global Absolute
Assuming the 90 days horizon Alternative Asset is expected to generate 1.8 times less return on investment than Global Absolute. But when comparing it to its historical volatility, Alternative Asset Allocation is 2.58 times less risky than Global Absolute. It trades about 0.17 of its potential returns per unit of risk. Global Absolute Return is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,050 in Global Absolute Return on September 1, 2025 and sell it today you would earn a total of 41.00 from holding Global Absolute Return or generate 3.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alternative Asset Allocation vs. Global Absolute Return
Performance |
| Timeline |
| Alternative Asset |
| Global Absolute Return |
Alternative Asset and Global Absolute Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alternative Asset and Global Absolute
The main advantage of trading using opposite Alternative Asset and Global Absolute positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alternative Asset position performs unexpectedly, Global Absolute 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 Global Absolute will offset losses from the drop in Global Absolute's long position.| Alternative Asset vs. Global Resources Fund | Alternative Asset vs. Firsthand Alternative Energy | Alternative Asset vs. Blackrock All Cap Energy | Alternative Asset vs. Goehring Rozencwajg Resources |
| Global Absolute vs. Europac Gold Fund | Global Absolute vs. Global Gold Fund | Global Absolute vs. International Investors Gold | Global Absolute vs. Gold And Precious |
Check out your portfolio center.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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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