Correlation Between STRATSSM Certificates and Strats Trust
Can any of the company-specific risk be diversified away by investing in both STRATSSM Certificates 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 STRATSSM Certificates and Strats Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STRATSSM Certificates series and Strats Trust Cellular, you can compare the effects of market volatilities on STRATSSM Certificates 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 STRATSSM Certificates with a short position of Strats Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of STRATSSM Certificates and Strats Trust.
Diversification Opportunities for STRATSSM Certificates and Strats Trust
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between STRATSSM and Strats is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding STRATSSM Certificates series 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 STRATSSM Certificates 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 STRATSSM Certificates series 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 STRATSSM Certificates i.e., STRATSSM Certificates and Strats Trust go up and down completely randomly.
Pair Corralation between STRATSSM Certificates and Strats Trust
Considering the 90-day investment horizon STRATSSM Certificates is expected to generate 1.82 times less return on investment than Strats Trust. But when comparing it to its historical volatility, STRATSSM Certificates series is 1.16 times less risky than Strats Trust. It trades about 0.02 of its potential returns per unit of risk. Strats Trust Cellular is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 758.00 in Strats Trust Cellular on September 2, 2024 and sell it today you would earn a total of 227.00 from holding Strats Trust Cellular or generate 29.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.31% |
| Values | Daily Returns |
STRATSSM Certificates series vs. Strats Trust Cellular
Performance |
| Timeline |
| STRATSSM Certificates |
| Strats Trust Cellular |
STRATSSM Certificates and Strats Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STRATSSM Certificates and Strats Trust
The main advantage of trading using opposite STRATSSM Certificates and Strats Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STRATSSM Certificates 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.| STRATSSM Certificates vs. CMS Energy Corp | STRATSSM Certificates vs. Southern Co | STRATSSM Certificates vs. Duke Energy Corp | STRATSSM Certificates vs. Southern Co |
| Strats Trust vs. CMS Energy Corp | Strats Trust vs. Southern Co | Strats Trust vs. Duke Energy Corp | Strats Trust vs. Southern Co |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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