Correlation Between Ace Global and AssetMark Financial

Can any of the company-specific risk be diversified away by investing in both Ace Global and AssetMark Financial 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 Ace Global and AssetMark Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ace Global Business and AssetMark Financial Holdings, you can compare the effects of market volatilities on Ace Global and AssetMark Financial 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 Ace Global with a short position of AssetMark Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ace Global and AssetMark Financial.

Diversification Opportunities for Ace Global and AssetMark Financial

0.7

Correlation Coefficient

Ace Global  AssetMark Financial

Poor diversification

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

Pair Corralation between Ace Global and AssetMark Financial

Given the investment horizon of 90 days Ace Global Business is expected to generate 0.32 times more return on investment than AssetMark Financial. However, Ace Global Business is 3.15 times less risky than AssetMark Financial. It trades about 0.02 of its potential returns per unit of risk. AssetMark Financial Holdings is currently generating about -0.04 per unit of risk. If you would invest  1,220  in Ace Global Business on February 2, 2024 and sell it today you would earn a total of  3.00  from holding Ace Global Business or generate 0.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	51.16%
Values	Daily Returns

Ace Global Business  vs.  AssetMark Financial Holdings

Ace Global Business

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Ace Global Business has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Ace Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

AssetMark Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AssetMark Financial Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating primary indicators, AssetMark Financial may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Ace Global and AssetMark Financial

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

The idea behind Ace Global Business and AssetMark Financial Holdings 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.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.