Correlation Between Roundhill BIG and Roundhill Daily
Can any of the company-specific risk be diversified away by investing in both Roundhill BIG and Roundhill Daily 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 Roundhill BIG and Roundhill Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roundhill BIG Tech and Roundhill Daily Inverse, you can compare the effects of market volatilities on Roundhill BIG and Roundhill Daily 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 Roundhill BIG with a short position of Roundhill Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roundhill BIG and Roundhill Daily.
Diversification Opportunities for Roundhill BIG and Roundhill Daily
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Roundhill and Roundhill is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Roundhill BIG Tech and Roundhill Daily Inverse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roundhill Daily Inverse and Roundhill BIG 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 Roundhill BIG Tech are associated (or correlated) with Roundhill Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roundhill Daily Inverse has no effect on the direction of Roundhill BIG i.e., Roundhill BIG and Roundhill Daily go up and down completely randomly.
Pair Corralation between Roundhill BIG and Roundhill Daily
Given the investment horizon of 90 days Roundhill BIG Tech is expected to generate 0.9 times more return on investment than Roundhill Daily. However, Roundhill BIG Tech is 1.12 times less risky than Roundhill Daily. It trades about 0.14 of its potential returns per unit of risk. Roundhill Daily Inverse is currently generating about -0.05 per unit of risk. If you would invest 3,288 in Roundhill BIG Tech on September 14, 2024 and sell it today you would earn a total of 2,379 from holding Roundhill BIG Tech or generate 72.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 71.38% |
| Values | Daily Returns |
Roundhill BIG Tech vs. Roundhill Daily Inverse
Performance |
| Timeline |
| Roundhill BIG Tech |
| Roundhill Daily Inverse |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Roundhill BIG and Roundhill Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roundhill BIG and Roundhill Daily
The main advantage of trading using opposite Roundhill BIG and Roundhill Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roundhill BIG position performs unexpectedly, Roundhill Daily 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 Roundhill Daily will offset losses from the drop in Roundhill Daily's long position.The idea behind Roundhill BIG Tech and Roundhill Daily Inverse 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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