Correlation Between PICTON Credit and WaveFront All

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

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

Diversification Opportunities for PICTON Credit and WaveFront All

0.83

Correlation Coefficient

PICTON Credit  WaveFront All

Very poor diversification

The 3 months correlation between PICTON and WaveFront is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding PICTON Credit Opportunities and WaveFront All Weather Alternat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WaveFront All Weather and PICTON Credit 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 PICTON Credit Opportunities are associated (or correlated) with WaveFront All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WaveFront All Weather has no effect on the direction of PICTON Credit i.e., PICTON Credit and WaveFront All go up and down completely randomly.

Pair Corralation between PICTON Credit and WaveFront All

Assuming the 90 days trading horizon PICTON Credit is expected to generate 2.07 times less return on investment than WaveFront All. But when comparing it to its historical volatility, PICTON Credit Opportunities is 1.73 times less risky than WaveFront All. It trades about 0.14 of its potential returns per unit of risk. WaveFront All Weather Alternative is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,911  in WaveFront All Weather Alternative on April 20, 2025 and sell it today you would earn a total of  133.00  from holding WaveFront All Weather Alternative or generate 6.96% return on investment over 90 days.

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

PICTON Credit Opportunities  vs.  WaveFront All Weather Alternat

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.

WaveFront All Weather

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WaveFront All Weather Alternative are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of very unfluctuating basic indicators, WaveFront All may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with PICTON Credit and WaveFront All

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

The idea behind PICTON Credit Opportunities and WaveFront All Weather 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.