Correlation Between Stadion Tactical and Stadion Trilogy

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

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

Diversification Opportunities for Stadion Tactical and Stadion Trilogy

0.65

Correlation Coefficient

Stadion Tactical  Stadion Trilogy

Poor diversification

The 3 months correlation between Stadion and Stadion is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Stadion Tactical Defensive and Stadion Trilogy Alternative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stadion Trilogy Alte and Stadion Tactical 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 Stadion Tactical Defensive are associated (or correlated) with Stadion Trilogy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stadion Trilogy Alte has no effect on the direction of Stadion Tactical i.e., Stadion Tactical and Stadion Trilogy go up and down completely randomly.

Pair Corralation between Stadion Tactical and Stadion Trilogy

Assuming the 90 days horizon Stadion Tactical Defensive is expected to generate 1.38 times more return on investment than Stadion Trilogy. However, Stadion Tactical is 1.38 times more volatile than Stadion Trilogy Alternative. It trades about 0.03 of its potential returns per unit of risk. Stadion Trilogy Alternative is currently generating about -0.03 per unit of risk. If you would invest  1,453  in Stadion Tactical Defensive on February 5, 2024 and sell it today you would earn a total of  93.00  from holding Stadion Tactical Defensive or generate 6.4% return on investment over 90 days.

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

Stadion Tactical Defensive  vs.  Stadion Trilogy Alternative

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 recent stock price disturbance, may contribute to short-term losses for the investors.

Stadion Trilogy Alte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stadion Trilogy Alternative has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Stadion Trilogy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Stadion Tactical and Stadion Trilogy

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

The idea behind Stadion Tactical Defensive and Stadion Trilogy Alternative 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .