Correlation Between Dividend Growth and Dividend
Can any of the company-specific risk be diversified away by investing in both Dividend Growth and Dividend 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 Dividend Growth and Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dividend Growth Split and Dividend 15 Split, you can compare the effects of market volatilities on Dividend Growth and Dividend 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 Dividend Growth with a short position of Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dividend Growth and Dividend.
Diversification Opportunities for Dividend Growth and Dividend
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dividend and Dividend is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Dividend Growth Split and Dividend 15 Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dividend 15 Split and Dividend Growth 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 Dividend Growth Split are associated (or correlated) with Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dividend 15 Split has no effect on the direction of Dividend Growth i.e., Dividend Growth and Dividend go up and down completely randomly.
Pair Corralation between Dividend Growth and Dividend
Assuming the 90 days trading horizon Dividend Growth is expected to generate 1.41 times less return on investment than Dividend. But when comparing it to its historical volatility, Dividend Growth Split is 1.23 times less risky than Dividend. It trades about 0.04 of its potential returns per unit of risk. Dividend 15 Split is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 405.00 in Dividend 15 Split on November 2, 2024 and sell it today you would earn a total of 216.00 from holding Dividend 15 Split or generate 53.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dividend Growth Split vs. Dividend 15 Split
Performance |
| Timeline |
| Dividend Growth Split |
| Dividend 15 Split |
Dividend Growth and Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dividend Growth and Dividend
The main advantage of trading using opposite Dividend Growth and Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dividend Growth position performs unexpectedly, Dividend 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 Dividend will offset losses from the drop in Dividend's long position.| Dividend Growth vs. Life Banc Split | Dividend Growth vs. North American Financial | Dividend Growth vs. Financial 15 Split | Dividend Growth vs. Dividend 15 Split |
| Dividend vs. North American Financial | Dividend vs. Dividend Growth Split | Dividend vs. Dividend 15 Split | Dividend vs. Financial 15 Split |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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