Correlation Between FT Vest and SPDR BOFA
Can any of the company-specific risk be diversified away by investing in both FT Vest and SPDR BOFA 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 FT Vest and SPDR BOFA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FT Vest Equity and SPDR BOFA MERRILL, you can compare the effects of market volatilities on FT Vest and SPDR BOFA 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 FT Vest with a short position of SPDR BOFA. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Vest and SPDR BOFA.
Diversification Opportunities for FT Vest and SPDR BOFA
Average diversification
The 3 months correlation between DHDG and SPDR is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding FT Vest Equity and SPDR BOFA MERRILL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR BOFA MERRILL and FT Vest 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 FT Vest Equity are associated (or correlated) with SPDR BOFA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR BOFA MERRILL has no effect on the direction of FT Vest i.e., FT Vest and SPDR BOFA go up and down completely randomly.
Pair Corralation between FT Vest and SPDR BOFA
Given the investment horizon of 90 days FT Vest is expected to generate 2.79 times less return on investment than SPDR BOFA. But when comparing it to its historical volatility, FT Vest Equity is 6.31 times less risky than SPDR BOFA. It trades about 0.17 of its potential returns per unit of risk. SPDR BOFA MERRILL is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,165 in SPDR BOFA MERRILL on September 12, 2024 and sell it today you would earn a total of 725.00 from holding SPDR BOFA MERRILL or generate 62.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 10.88% |
| Values | Daily Returns |
FT Vest Equity vs. SPDR BOFA MERRILL
Performance |
| Timeline |
| FT Vest Equity |
| SPDR BOFA MERRILL |
FT Vest and SPDR BOFA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FT Vest and SPDR BOFA
The main advantage of trading using opposite FT Vest and SPDR BOFA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT Vest position performs unexpectedly, SPDR BOFA 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 SPDR BOFA will offset losses from the drop in SPDR BOFA's long position.| FT Vest vs. Northern Lights | FT Vest vs. Dimensional International High | FT Vest vs. JPMorgan Fundamental Data | FT Vest vs. Matthews China Discovery |
| SPDR BOFA vs. FT Vest Equity | SPDR BOFA vs. Northern Lights | SPDR BOFA vs. Dimensional International High | SPDR BOFA vs. JPMorgan Fundamental Data |
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 CEOs Directory module to screen CEOs from public companies around the world.
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