Correlation Between Dividend Select and Global Dividend
Can any of the company-specific risk be diversified away by investing in both Dividend Select and Global 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 Select and Global Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dividend Select 15 and Global Dividend Growth, you can compare the effects of market volatilities on Dividend Select and Global 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 Select with a short position of Global Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dividend Select and Global Dividend.
Diversification Opportunities for Dividend Select and Global Dividend
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dividend and Global is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Dividend Select 15 and Global Dividend Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Dividend Growth and Dividend Select 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 Select 15 are associated (or correlated) with Global Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Dividend Growth has no effect on the direction of Dividend Select i.e., Dividend Select and Global Dividend go up and down completely randomly.
Pair Corralation between Dividend Select and Global Dividend
Assuming the 90 days horizon Dividend Select is expected to generate 2.05 times less return on investment than Global Dividend. But when comparing it to its historical volatility, Dividend Select 15 is 1.9 times less risky than Global Dividend. It trades about 0.21 of its potential returns per unit of risk. Global Dividend Growth is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,130 in Global Dividend Growth on August 30, 2024 and sell it today you would earn a total of 80.00 from holding Global Dividend Growth or generate 7.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dividend Select 15 vs. Global Dividend Growth
Performance |
| Timeline |
| Dividend Select 15 |
| Global Dividend Growth |
Dividend Select and Global Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dividend Select and Global Dividend
The main advantage of trading using opposite Dividend Select and Global Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dividend Select position performs unexpectedly, Global 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 Global Dividend will offset losses from the drop in Global Dividend's long position.| Dividend Select vs. Orca Energy Group | Dividend Select vs. Rogers Communications | Dividend Select vs. Aclara Resources | Dividend Select vs. Buhler Industries |
| Global Dividend vs. E Split Corp | Global Dividend vs. Brompton Split Banc | Global Dividend vs. Life Banc Split | Global Dividend vs. Real Estate E Commerce |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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