Correlation Between WaveFront All and PICTON Credit

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

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

Diversification Opportunities for WaveFront All and PICTON Credit

0.83

Correlation Coefficient

WaveFront All  PICTON Credit

Very poor diversification

The 3 months correlation between WaveFront and PICTON is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding WaveFront All Weather Alternat 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 WaveFront All 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 WaveFront All Weather Alternative 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 WaveFront All i.e., WaveFront All and PICTON Credit go up and down completely randomly.

Pair Corralation between WaveFront All and PICTON Credit

Assuming the 90 days trading horizon WaveFront All Weather Alternative is expected to generate 1.73 times more return on investment than PICTON Credit. However, WaveFront All is 1.73 times more volatile than PICTON Credit Opportunities. It trades about 0.17 of its potential returns per unit of risk. PICTON Credit Opportunities is currently generating about 0.14 per unit of risk. 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

WaveFront All Weather Alternat  vs.  PICTON Credit Opportunities

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.

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 WaveFront All and PICTON Credit

The main advantage of trading using opposite WaveFront All and PICTON Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WaveFront All 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 WaveFront All Weather Alternative 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.