Correlation Between PowerShares and PowerShares Global
Can any of the company-specific risk be diversified away by investing in both PowerShares and PowerShares Global 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 PowerShares and PowerShares Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PowerShares and PowerShares Global Funds, you can compare the effects of market volatilities on PowerShares and PowerShares Global 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 PowerShares with a short position of PowerShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of PowerShares and PowerShares Global.
Diversification Opportunities for PowerShares and PowerShares Global
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between PowerShares and PowerShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PowerShares and PowerShares Global Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PowerShares Global Funds and PowerShares 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 PowerShares are associated (or correlated) with PowerShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PowerShares Global Funds has no effect on the direction of PowerShares i.e., PowerShares and PowerShares Global go up and down completely randomly.
Pair Corralation between PowerShares and PowerShares Global
If you would invest 31,685 in PowerShares Global Funds on September 12, 2024 and sell it today you would earn a total of 4,769 from holding PowerShares Global Funds or generate 15.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
PowerShares vs. PowerShares Global Funds
Performance |
| Timeline |
| PowerShares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| PowerShares Global Funds |
PowerShares and PowerShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PowerShares and PowerShares Global
The main advantage of trading using opposite PowerShares and PowerShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PowerShares position performs unexpectedly, PowerShares Global 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 PowerShares Global will offset losses from the drop in PowerShares Global's long position.The idea behind PowerShares and PowerShares Global Funds 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 Stocks Directory module to find actively traded stocks across global markets.
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