Correlation Between All Asset and Stadion Tactical

Can any of the company-specific risk be diversified away by investing in both All Asset and Stadion Tactical 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 All Asset and Stadion Tactical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between All Asset Fund and Stadion Tactical Defensive, you can compare the effects of market volatilities on All Asset and Stadion Tactical 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 All Asset with a short position of Stadion Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of All Asset and Stadion Tactical.

Diversification Opportunities for All Asset and Stadion Tactical

0.89

Correlation Coefficient

All Asset  Stadion Tactical

Very poor diversification

The 3 months correlation between All and Stadion is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding All Asset Fund and Stadion Tactical Defensive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stadion Tactical Def and All 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 All Asset Fund are associated (or correlated) with Stadion Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stadion Tactical Def has no effect on the direction of All Asset i.e., All Asset and Stadion Tactical go up and down completely randomly.

Pair Corralation between All Asset and Stadion Tactical

Assuming the 90 days horizon All Asset is expected to generate 1.79 times less return on investment than Stadion Tactical. But when comparing it to its historical volatility, All Asset Fund is 1.29 times less risky than Stadion Tactical. It trades about 0.05 of its potential returns per unit of risk. Stadion Tactical Defensive is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,602  in Stadion Tactical Defensive on January 24, 2024 and sell it today you would earn a total of  171.00  from holding Stadion Tactical Defensive or generate 10.67% return on investment over 90 days.

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

All Asset Fund  vs.  Stadion Tactical Defensive

All Asset Fund

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in All Asset Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, All Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Stadion Tactical Def

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Stadion Tactical Defensive are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Stadion Tactical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with All Asset and Stadion Tactical

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

The idea behind All Asset Fund and Stadion Tactical Defensive 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.