Correlation Between Alternative Asset and Financial Industries
Can any of the company-specific risk be diversified away by investing in both Alternative Asset and Financial Industries 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 Financial Industries 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 Financial Industries Fund, you can compare the effects of market volatilities on Alternative Asset and Financial Industries 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 Financial Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alternative Asset and Financial Industries.
Diversification Opportunities for Alternative Asset and Financial Industries
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alternative and Financial is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Alternative Asset Allocation and Financial Industries Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Industries 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 Financial Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Industries has no effect on the direction of Alternative Asset i.e., Alternative Asset and Financial Industries go up and down completely randomly.
Pair Corralation between Alternative Asset and Financial Industries
Assuming the 90 days horizon Alternative Asset Allocation is expected to generate 0.2 times more return on investment than Financial Industries. However, Alternative Asset Allocation is 5.02 times less risky than Financial Industries. It trades about 0.19 of its potential returns per unit of risk. Financial Industries Fund is currently generating about -0.04 per unit of risk. If you would invest 1,647 in Alternative Asset Allocation on August 21, 2025 and sell it today you would earn a total of 38.00 from holding Alternative Asset Allocation or generate 2.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alternative Asset Allocation vs. Financial Industries Fund
Performance |
| Timeline |
| Alternative Asset |
| Financial Industries |
Alternative Asset and Financial Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alternative Asset and Financial Industries
The main advantage of trading using opposite Alternative Asset and Financial Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alternative Asset position performs unexpectedly, Financial Industries 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 Financial Industries will offset losses from the drop in Financial Industries' long position.| Alternative Asset vs. Regional Bank Fund | Alternative Asset vs. Regional Bank Fund | Alternative Asset vs. Multimanager Lifestyle Moderate | Alternative Asset vs. Multimanager Lifestyle Balanced |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |