Correlation Between Formidable ETF and AltShares Event

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

By analyzing existing cross correlation between Formidable ETF and AltShares Event Driven ETF, you can compare the effects of market volatilities on Formidable ETF and AltShares Event 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 Formidable ETF with a short position of AltShares Event. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formidable ETF and AltShares Event.

Diversification Opportunities for Formidable ETF and AltShares Event

0.92

Correlation Coefficient

Formidable ETF  AltShares Event

Almost no diversification

The 3 months correlation between Formidable and AltShares is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Formidable ETF and AltShares Event Driven ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AltShares Event Driven and Formidable ETF 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 Formidable ETF are associated (or correlated) with AltShares Event. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AltShares Event Driven has no effect on the direction of Formidable ETF i.e., Formidable ETF and AltShares Event go up and down completely randomly.

Pair Corralation between Formidable ETF and AltShares Event

Given the investment horizon of 90 days Formidable ETF is expected to generate 1.96 times more return on investment than AltShares Event. However, Formidable ETF is 1.96 times more volatile than AltShares Event Driven ETF. It trades about 0.19 of its potential returns per unit of risk. AltShares Event Driven ETF is currently generating about 0.25 per unit of risk. If you would invest  2,132  in Formidable ETF on May 3, 2025 and sell it today you would earn a total of  185.00  from holding Formidable ETF or generate 8.68% return on investment over 90 days.

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

Formidable ETF  vs.  AltShares Event Driven ETF

Formidable ETF

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Formidable ETF are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Formidable ETF may actually be approaching a critical reversion point that can send shares even higher in September 2025.

AltShares Event Driven

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AltShares Event Driven ETF are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, AltShares Event is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Formidable ETF and AltShares Event

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

The idea behind Formidable ETF and AltShares Event Driven ETF 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.