Correlation Between ETFS Battery and ETFS SP
Can any of the company-specific risk be diversified away by investing in both ETFS Battery and ETFS SP 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 ETFS Battery and ETFS SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETFS Battery Tech and ETFS SP Biotech, you can compare the effects of market volatilities on ETFS Battery and ETFS SP 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 ETFS Battery with a short position of ETFS SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Battery and ETFS SP.
Diversification Opportunities for ETFS Battery and ETFS SP
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between ETFS and ETFS is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Battery Tech and ETFS SP Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFS SP Biotech and ETFS Battery 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 ETFS Battery Tech are associated (or correlated) with ETFS SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFS SP Biotech has no effect on the direction of ETFS Battery i.e., ETFS Battery and ETFS SP go up and down completely randomly.
Pair Corralation between ETFS Battery and ETFS SP
Assuming the 90 days trading horizon ETFS Battery Tech is expected to under-perform the ETFS SP. But the etf apears to be less risky and, when comparing its historical volatility, ETFS Battery Tech is 1.93 times less risky than ETFS SP. The etf trades about -0.01 of its potential returns per unit of risk. The ETFS SP Biotech is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5,120 in ETFS SP Biotech on September 1, 2024 and sell it today you would earn a total of 122.00 from holding ETFS SP Biotech or generate 2.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETFS Battery Tech vs. ETFS SP Biotech
Performance |
| Timeline |
| ETFS Battery Tech |
| ETFS SP Biotech |
ETFS Battery and ETFS SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Battery and ETFS SP
The main advantage of trading using opposite ETFS Battery and ETFS SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Battery position performs unexpectedly, ETFS SP 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 ETFS SP will offset losses from the drop in ETFS SP's long position.| ETFS Battery vs. ETFS Ultra Long | ETFS Battery vs. ETFS Ultra Short | ETFS Battery vs. ETFS FANG ETF | ETFS Battery vs. ETFS SP Biotech |
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Check out your portfolio center.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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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