Correlation Between Strats SM and Strats Trust
Can any of the company-specific risk be diversified away by investing in both Strats SM and Strats Trust 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 Strats Trust 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 Strats Trust Cellular, you can compare the effects of market volatilities on Strats SM and Strats Trust 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 Strats Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strats SM and Strats Trust.
Diversification Opportunities for Strats SM and Strats Trust
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Strats and Strats is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Strats SM Trust and Strats Trust Cellular in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strats Trust Cellular 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 Strats Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strats Trust Cellular has no effect on the direction of Strats SM i.e., Strats SM and Strats Trust go up and down completely randomly.
Pair Corralation between Strats SM and Strats Trust
Considering the 90-day investment horizon Strats SM Trust is expected to generate 1.14 times more return on investment than Strats Trust. However, Strats SM is 1.14 times more volatile than Strats Trust Cellular. It trades about 0.03 of its potential returns per unit of risk. Strats Trust Cellular is currently generating about 0.03 per unit of risk. If you would invest 2,113 in Strats SM Trust on September 2, 2024 and sell it today you would earn a total of 381.00 from holding Strats SM Trust or generate 18.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 77.86% |
| Values | Daily Returns |
Strats SM Trust vs. Strats Trust Cellular
Performance |
| Timeline |
| Strats SM Trust |
| Strats Trust Cellular |
Strats SM and Strats Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strats SM and Strats Trust
The main advantage of trading using opposite Strats SM and Strats Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strats SM position performs unexpectedly, Strats Trust 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 Trust will offset losses from the drop in Strats Trust's long position.| Strats SM vs. STRATS SM Trust | Strats SM vs. STRATSSM Certificates series | Strats SM vs. STRATS SM Trust | Strats SM vs. Strats SM Trust |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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