Correlation Between Dynamic Alternative and PICTON Credit

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

By analyzing existing cross correlation between Dynamic Alternative Yield and PICTON Credit Opportunities, you can compare the effects of market volatilities on Dynamic Alternative and PICTON Credit 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 Dynamic Alternative with a short position of PICTON Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynamic Alternative and PICTON Credit.

Diversification Opportunities for Dynamic Alternative and PICTON Credit

0.48

Correlation Coefficient

Dynamic Alternative  PICTON Credit

Very weak diversification

The 3 months correlation between Dynamic and PICTON is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Dynamic Alternative Yield and PICTON Credit Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PICTON Credit Opport and Dynamic Alternative 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 Dynamic Alternative Yield are associated (or correlated) with PICTON Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PICTON Credit Opport has no effect on the direction of Dynamic Alternative i.e., Dynamic Alternative and PICTON Credit go up and down completely randomly.

Pair Corralation between Dynamic Alternative and PICTON Credit

Assuming the 90 days trading horizon Dynamic Alternative is expected to generate 1.71 times less return on investment than PICTON Credit. But when comparing it to its historical volatility, Dynamic Alternative Yield is 1.36 times less risky than PICTON Credit. It trades about 0.11 of its potential returns per unit of risk. PICTON Credit Opportunities is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  934.00  in PICTON Credit Opportunities on April 20, 2025 and sell it today you would earn a total of  31.00  from holding PICTON Credit Opportunities or generate 3.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Dynamic Alternative Yield  vs.  PICTON Credit Opportunities

Dynamic Alternative Yield

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dynamic Alternative Yield are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly stable basic indicators, Dynamic Alternative is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

PICTON Credit Opport

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PICTON Credit Opportunities are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, PICTON Credit is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Dynamic Alternative and PICTON Credit

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

The idea behind Dynamic Alternative Yield and PICTON Credit Opportunities 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.