Correlation Between ETFS SP and ETFS Battery
Can any of the company-specific risk be diversified away by investing in both ETFS SP and ETFS Battery 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 SP and ETFS Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETFS SP Biotech and ETFS Battery Tech, you can compare the effects of market volatilities on ETFS SP and ETFS Battery 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 SP with a short position of ETFS Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS SP and ETFS Battery.
Diversification Opportunities for ETFS SP and ETFS Battery
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ETFS and ETFS is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding ETFS SP Biotech and ETFS Battery Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFS Battery Tech and ETFS SP 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 SP Biotech are associated (or correlated) with ETFS Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFS Battery Tech has no effect on the direction of ETFS SP i.e., ETFS SP and ETFS Battery go up and down completely randomly.
Pair Corralation between ETFS SP and ETFS Battery
Assuming the 90 days trading horizon ETFS SP Biotech is expected to generate 1.76 times more return on investment than ETFS Battery. However, ETFS SP is 1.76 times more volatile than ETFS Battery Tech. It trades about 0.03 of its potential returns per unit of risk. ETFS Battery Tech is currently generating about -0.05 per unit of risk. If you would invest 5,043 in ETFS SP Biotech on August 29, 2024 and sell it today you would earn a total of 55.00 from holding ETFS SP Biotech or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETFS SP Biotech vs. ETFS Battery Tech
Performance |
| Timeline |
| ETFS SP Biotech |
| ETFS Battery Tech |
ETFS SP and ETFS Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS SP and ETFS Battery
The main advantage of trading using opposite ETFS SP and ETFS Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS SP position performs unexpectedly, ETFS Battery 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 Battery will offset losses from the drop in ETFS Battery's long position.| ETFS SP vs. ETFS Battery Tech | ETFS SP vs. ETFS Ultra Long | ETFS SP vs. ETFS Ultra Short | ETFS SP vs. ETFS FANG ETF |
| ETFS Battery vs. BetaShares Global Government | ETFS Battery vs. BetaShares Geared Australian | ETFS Battery vs. Global X Semiconductor | ETFS Battery vs. iShares UBS Government |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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