Correlation Between Freedom Bank and STRATS SM
Can any of the company-specific risk be diversified away by investing in both Freedom Bank and STRATS SM 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 Freedom Bank and STRATS SM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freedom Bank of and STRATS SM Trust, you can compare the effects of market volatilities on Freedom Bank and STRATS SM 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 Freedom Bank with a short position of STRATS SM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Bank and STRATS SM.
Diversification Opportunities for Freedom Bank and STRATS SM
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Freedom and STRATS is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Bank of and STRATS SM Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRATS SM Trust and Freedom Bank 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 Freedom Bank of are associated (or correlated) with STRATS SM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRATS SM Trust has no effect on the direction of Freedom Bank i.e., Freedom Bank and STRATS SM go up and down completely randomly.
Pair Corralation between Freedom Bank and STRATS SM
Given the investment horizon of 90 days Freedom Bank of is expected to generate 1.33 times more return on investment than STRATS SM. However, Freedom Bank is 1.33 times more volatile than STRATS SM Trust. It trades about 0.15 of its potential returns per unit of risk. STRATS SM Trust is currently generating about 0.0 per unit of risk. If you would invest 1,074 in Freedom Bank of on September 12, 2024 and sell it today you would earn a total of 27.00 from holding Freedom Bank of or generate 2.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freedom Bank of vs. STRATS SM Trust
Performance |
| Timeline |
| Freedom Bank |
| STRATS SM Trust |
Freedom Bank and STRATS SM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Bank and STRATS SM
The main advantage of trading using opposite Freedom Bank and STRATS SM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Bank position performs unexpectedly, STRATS SM 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 STRATS SM will offset losses from the drop in STRATS SM's long position.| Freedom Bank vs. HUMANA INC | Freedom Bank vs. Barloworld Ltd ADR | Freedom Bank vs. Morningstar Unconstrained Allocation | Freedom Bank vs. Thrivent High Yield |
| STRATS SM vs. Freedom Bank of | STRATS SM vs. HUMANA INC | STRATS SM vs. Barloworld Ltd ADR | STRATS SM vs. Morningstar Unconstrained Allocation |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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