Correlation Between Main Buywrite and PeakShares Sector
Can any of the company-specific risk be diversified away by investing in both Main Buywrite and PeakShares Sector 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 Main Buywrite and PeakShares Sector into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Main Buywrite ETF and PeakShares Sector Rotation, you can compare the effects of market volatilities on Main Buywrite and PeakShares Sector 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 Main Buywrite with a short position of PeakShares Sector. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Buywrite and PeakShares Sector.
Diversification Opportunities for Main Buywrite and PeakShares Sector
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Main and PeakShares is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Main Buywrite ETF and PeakShares Sector Rotation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PeakShares Sector and Main Buywrite 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 Main Buywrite ETF are associated (or correlated) with PeakShares Sector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PeakShares Sector has no effect on the direction of Main Buywrite i.e., Main Buywrite and PeakShares Sector go up and down completely randomly.
Pair Corralation between Main Buywrite and PeakShares Sector
Given the investment horizon of 90 days Main Buywrite is expected to generate 2.94 times less return on investment than PeakShares Sector. But when comparing it to its historical volatility, Main Buywrite ETF is 2.83 times less risky than PeakShares Sector. It trades about 0.12 of its potential returns per unit of risk. PeakShares Sector Rotation is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,544 in PeakShares Sector Rotation on September 1, 2024 and sell it today you would earn a total of 332.00 from holding PeakShares Sector Rotation or generate 13.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Main Buywrite ETF vs. PeakShares Sector Rotation
Performance |
| Timeline |
| Main Buywrite ETF |
| PeakShares Sector |
Main Buywrite and PeakShares Sector Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Main Buywrite and PeakShares Sector
The main advantage of trading using opposite Main Buywrite and PeakShares Sector positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Buywrite position performs unexpectedly, PeakShares Sector 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 PeakShares Sector will offset losses from the drop in PeakShares Sector's long position.| Main Buywrite vs. Main Sector Rotation | Main Buywrite vs. iShares Trust | Main Buywrite vs. Janus Detroit Street | Main Buywrite vs. Bondbloxx ETF Trust |
| PeakShares Sector vs. Global X SP | PeakShares Sector vs. Amplify CWP Enhanced | PeakShares Sector vs. JPMorgan Equity Premium |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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