Correlation Between Forstrong Global and Dynamic Active
Can any of the company-specific risk be diversified away by investing in both Forstrong Global and Dynamic Active 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 Forstrong Global and Dynamic Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forstrong Global Income and Dynamic Active Preferred, you can compare the effects of market volatilities on Forstrong Global and Dynamic Active 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 Forstrong Global with a short position of Dynamic Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forstrong Global and Dynamic Active.
Diversification Opportunities for Forstrong Global and Dynamic Active
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Forstrong and Dynamic is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Forstrong Global Income and Dynamic Active Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynamic Active Preferred and Forstrong Global 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 Forstrong Global Income are associated (or correlated) with Dynamic Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynamic Active Preferred has no effect on the direction of Forstrong Global i.e., Forstrong Global and Dynamic Active go up and down completely randomly.
Pair Corralation between Forstrong Global and Dynamic Active
Assuming the 90 days trading horizon Forstrong Global is expected to generate 2.21 times less return on investment than Dynamic Active. But when comparing it to its historical volatility, Forstrong Global Income is 1.71 times less risky than Dynamic Active. It trades about 0.13 of its potential returns per unit of risk. Dynamic Active Preferred is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,815 in Dynamic Active Preferred on August 31, 2024 and sell it today you would earn a total of 436.00 from holding Dynamic Active Preferred or generate 24.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Forstrong Global Income vs. Dynamic Active Preferred
Performance |
| Timeline |
| Forstrong Global Income |
| Dynamic Active Preferred |
Forstrong Global and Dynamic Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forstrong Global and Dynamic Active
The main advantage of trading using opposite Forstrong Global and Dynamic Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forstrong Global position performs unexpectedly, Dynamic Active 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 Dynamic Active will offset losses from the drop in Dynamic Active's long position.| Forstrong Global vs. Forstrong Global Ex North | Forstrong Global vs. Forstrong Global Growth | Forstrong Global vs. Forstrong Emerging Markets | Forstrong Global vs. NBI High Yield |
| Dynamic Active vs. iShares SPTSX Canadian | Dynamic Active vs. Global X Active | Dynamic Active vs. BMO Covered Call | Dynamic Active vs. Forstrong Global Income |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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