Correlation Between Alphabet and Shenkman Floating

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

By analyzing existing cross correlation between Alphabet Inc Class C and Shenkman Floating Rate, you can compare the effects of market volatilities on Alphabet and Shenkman Floating 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 Alphabet with a short position of Shenkman Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Shenkman Floating.

Diversification Opportunities for Alphabet and Shenkman Floating

0.75

Correlation Coefficient

Alphabet  Shenkman Floating

Poor diversification

The 3 months correlation between Alphabet and Shenkman is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Shenkman Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenkman Floating Rate and Alphabet 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 Alphabet Inc Class C are associated (or correlated) with Shenkman Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenkman Floating Rate has no effect on the direction of Alphabet i.e., Alphabet and Shenkman Floating go up and down completely randomly.

Pair Corralation between Alphabet and Shenkman Floating

Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 14.7 times more return on investment than Shenkman Floating. However, Alphabet is 14.7 times more volatile than Shenkman Floating Rate. It trades about 0.14 of its potential returns per unit of risk. Shenkman Floating Rate is currently generating about 0.3 per unit of risk. If you would invest  16,500  in Alphabet Inc Class C on May 6, 2025 and sell it today you would earn a total of  2,495  from holding Alphabet Inc Class C or generate 15.12% return on investment over 90 days.

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

Alphabet Inc Class C  vs.  Shenkman Floating Rate

Alphabet Class C

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Alphabet reported solid returns over the last few months and may actually be approaching a breakup point.

Shenkman Floating Rate

Risk-Adjusted Performance

Solid

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

Pair Trading with Alphabet and Shenkman Floating

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

The idea behind Alphabet Inc Class C and Shenkman Floating Rate 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..