Correlation Between IPath Bloomberg and IPath Optimized
Can any of the company-specific risk be diversified away by investing in both IPath Bloomberg and IPath Optimized 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 IPath Bloomberg and IPath Optimized into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPath Bloomberg Cotton and IPath Optimized Currency, you can compare the effects of market volatilities on IPath Bloomberg and IPath Optimized 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 IPath Bloomberg with a short position of IPath Optimized. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPath Bloomberg and IPath Optimized.
Diversification Opportunities for IPath Bloomberg and IPath Optimized
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IPath and IPath is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding IPath Bloomberg Cotton and IPath Optimized Currency in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPath Optimized Currency and IPath Bloomberg 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 IPath Bloomberg Cotton are associated (or correlated) with IPath Optimized. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IPath Optimized Currency has no effect on the direction of IPath Bloomberg i.e., IPath Bloomberg and IPath Optimized go up and down completely randomly.
Pair Corralation between IPath Bloomberg and IPath Optimized
If you would invest 3,300 in IPath Optimized Currency on September 4, 2024 and sell it today you would earn a total of 0.00 from holding IPath Optimized Currency or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPath Bloomberg Cotton vs. IPath Optimized Currency
Performance |
| Timeline |
| IPath Bloomberg Cotton |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| IPath Optimized Currency |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
IPath Bloomberg and IPath Optimized Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPath Bloomberg and IPath Optimized
The main advantage of trading using opposite IPath Bloomberg and IPath Optimized positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPath Bloomberg position performs unexpectedly, IPath Optimized 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 IPath Optimized will offset losses from the drop in IPath Optimized's long position.The idea behind IPath Bloomberg Cotton and IPath Optimized Currency 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.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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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