Correlation Between SMI 3Fourteen and Roundhill ETF
Can any of the company-specific risk be diversified away by investing in both SMI 3Fourteen and Roundhill ETF 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 SMI 3Fourteen and Roundhill ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMI 3Fourteen Full Cycle and Roundhill ETF Trust, you can compare the effects of market volatilities on SMI 3Fourteen and Roundhill ETF 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 SMI 3Fourteen with a short position of Roundhill ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMI 3Fourteen and Roundhill ETF.
Diversification Opportunities for SMI 3Fourteen and Roundhill ETF
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SMI and Roundhill is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding SMI 3Fourteen Full Cycle and Roundhill ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roundhill ETF Trust and SMI 3Fourteen 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 SMI 3Fourteen Full Cycle are associated (or correlated) with Roundhill ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roundhill ETF Trust has no effect on the direction of SMI 3Fourteen i.e., SMI 3Fourteen and Roundhill ETF go up and down completely randomly.
Pair Corralation between SMI 3Fourteen and Roundhill ETF
Given the investment horizon of 90 days SMI 3Fourteen Full Cycle is expected to generate 1.06 times more return on investment than Roundhill ETF. However, SMI 3Fourteen is 1.06 times more volatile than Roundhill ETF Trust. It trades about 0.32 of its potential returns per unit of risk. Roundhill ETF Trust is currently generating about 0.17 per unit of risk. If you would invest 2,587 in SMI 3Fourteen Full Cycle on November 3, 2024 and sell it today you would earn a total of 155.00 from holding SMI 3Fourteen Full Cycle or generate 5.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
SMI 3Fourteen Full Cycle vs. Roundhill ETF Trust
Performance |
| Timeline |
| SMI 3Fourteen Full |
| Roundhill ETF Trust |
SMI 3Fourteen and Roundhill ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMI 3Fourteen and Roundhill ETF
The main advantage of trading using opposite SMI 3Fourteen and Roundhill ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMI 3Fourteen position performs unexpectedly, Roundhill ETF 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 Roundhill ETF will offset losses from the drop in Roundhill ETF's long position.| SMI 3Fourteen vs. FT Vest Equity | SMI 3Fourteen vs. Northern Lights | SMI 3Fourteen vs. Dimensional International High | SMI 3Fourteen vs. First Trust Exchange Traded |
| Roundhill ETF vs. FT Vest Equity | Roundhill ETF vs. Northern Lights | Roundhill ETF vs. Dimensional International High | Roundhill ETF vs. First Trust Exchange Traded |
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 Stocks Directory module to find actively traded stocks across global markets.
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