Correlation Between Strats SM and STRATSSM Certificates
Can any of the company-specific risk be diversified away by investing in both Strats SM and STRATSSM Certificates 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 Strats SM and STRATSSM Certificates into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strats SM Trust and STRATSSM Certificates series, you can compare the effects of market volatilities on Strats SM and STRATSSM Certificates 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 Strats SM with a short position of STRATSSM Certificates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strats SM and STRATSSM Certificates.
Diversification Opportunities for Strats SM and STRATSSM Certificates
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Strats and STRATSSM is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Strats SM Trust and STRATSSM Certificates series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRATSSM Certificates and Strats SM 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 Strats SM Trust are associated (or correlated) with STRATSSM Certificates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRATSSM Certificates has no effect on the direction of Strats SM i.e., Strats SM and STRATSSM Certificates go up and down completely randomly.
Pair Corralation between Strats SM and STRATSSM Certificates
Considering the 90-day investment horizon Strats SM is expected to generate 1.26 times less return on investment than STRATSSM Certificates. In addition to that, Strats SM is 1.18 times more volatile than STRATSSM Certificates series. It trades about 0.04 of its total potential returns per unit of risk. STRATSSM Certificates series is currently generating about 0.06 per unit of volatility. If you would invest 2,066 in STRATSSM Certificates series on September 3, 2024 and sell it today you would earn a total of 234.00 from holding STRATSSM Certificates series or generate 11.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 84.19% |
| Values | Daily Returns |
Strats SM Trust vs. STRATSSM Certificates series
Performance |
| Timeline |
| Strats SM Trust |
| STRATSSM Certificates |
Strats SM and STRATSSM Certificates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strats SM and STRATSSM Certificates
The main advantage of trading using opposite Strats SM and STRATSSM Certificates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strats SM position performs unexpectedly, STRATSSM Certificates 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 STRATSSM Certificates will offset losses from the drop in STRATSSM Certificates' long position.| Strats SM vs. STRATS SM Trust | Strats SM vs. STRATS SM Trust | Strats SM vs. Strats SM Trust | Strats SM vs. STRATSSM Certificates series |
| STRATSSM Certificates vs. Western Asset Global | STRATSSM Certificates vs. Invesco Trust For | STRATSSM Certificates vs. Logan Ridge Finance | STRATSSM Certificates vs. Invesco Advantage MIT |
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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