Correlation Between Swan Hedged and Core Alternative

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

By analyzing existing cross correlation between Swan Hedged Equity and Core Alternative ETF, you can compare the effects of market volatilities on Swan Hedged and Core Alternative 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 Swan Hedged with a short position of Core Alternative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swan Hedged and Core Alternative.

Diversification Opportunities for Swan Hedged and Core Alternative

-0.6

Correlation Coefficient

Swan Hedged  Core Alternative

Excellent diversification

The 3 months correlation between Swan and Core is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Swan Hedged Equity and Core Alternative ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Alternative ETF and Swan Hedged 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 Swan Hedged Equity are associated (or correlated) with Core Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Alternative ETF has no effect on the direction of Swan Hedged i.e., Swan Hedged and Core Alternative go up and down completely randomly.

Pair Corralation between Swan Hedged and Core Alternative

Given the investment horizon of 90 days Swan Hedged Equity is expected to generate 0.96 times more return on investment than Core Alternative. However, Swan Hedged Equity is 1.04 times less risky than Core Alternative. It trades about 0.29 of its potential returns per unit of risk. Core Alternative ETF is currently generating about -0.09 per unit of risk. If you would invest  2,225  in Swan Hedged Equity on May 3, 2025 and sell it today you would earn a total of  156.00  from holding Swan Hedged Equity or generate 7.01% return on investment over 90 days.

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

Swan Hedged Equity  vs.  Core Alternative ETF

Swan Hedged Equity

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Swan Hedged Equity are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Swan Hedged may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Core Alternative ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days Core Alternative ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Core Alternative is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Swan Hedged and Core Alternative

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

The idea behind Swan Hedged Equity and Core Alternative 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.