Correlation Between US Financial and Income Financial
Can any of the company-specific risk be diversified away by investing in both US Financial and Income Financial 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 US Financial and Income Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Financial 15 and Income Financial Trust, you can compare the effects of market volatilities on US Financial and Income Financial 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 US Financial with a short position of Income Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Financial and Income Financial.
Diversification Opportunities for US Financial and Income Financial
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FTU-PB and Income is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding US Financial 15 and Income Financial Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Financial Trust and US Financial 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 US Financial 15 are associated (or correlated) with Income Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Financial Trust has no effect on the direction of US Financial i.e., US Financial and Income Financial go up and down completely randomly.
Pair Corralation between US Financial and Income Financial
Assuming the 90 days trading horizon US Financial is expected to generate 2.86 times less return on investment than Income Financial. In addition to that, US Financial is 2.78 times more volatile than Income Financial Trust. It trades about 0.05 of its total potential returns per unit of risk. Income Financial Trust is currently generating about 0.36 per unit of volatility. If you would invest 827.00 in Income Financial Trust on August 30, 2024 and sell it today you would earn a total of 68.00 from holding Income Financial Trust or generate 8.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Financial 15 vs. Income Financial Trust
Performance |
| Timeline |
| US Financial 15 |
| Income Financial Trust |
US Financial and Income Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Financial and Income Financial
The main advantage of trading using opposite US Financial and Income Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Financial position performs unexpectedly, Income Financial 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 Income Financial will offset losses from the drop in Income Financial's long position.| US Financial vs. North American Financial | US Financial vs. Prime Dividend Corp | US Financial vs. Canadian Life Companies | US Financial vs. Financial 15 Split |
| Income Financial vs. Dividend Select 15 | Income Financial vs. Global Dividend Growth | Income Financial vs. Brompton Split Banc | Income Financial 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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