Correlation Between Gotham Large and Swan Hedged
Can any of the company-specific risk be diversified away by investing in both Gotham Large and Swan Hedged 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 Gotham Large and Swan Hedged into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gotham Large Value and Swan Hedged Equity, you can compare the effects of market volatilities on Gotham Large and Swan Hedged 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 Gotham Large with a short position of Swan Hedged. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gotham Large and Swan Hedged.
Diversification Opportunities for Gotham Large and Swan Hedged
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Gotham and Swan is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Gotham Large Value and Swan Hedged Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swan Hedged Equity and Gotham Large 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 Gotham Large Value are associated (or correlated) with Swan Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swan Hedged Equity has no effect on the direction of Gotham Large i.e., Gotham Large and Swan Hedged go up and down completely randomly.
Pair Corralation between Gotham Large and Swan Hedged
Assuming the 90 days horizon Gotham Large Value is expected to generate 1.22 times more return on investment than Swan Hedged. However, Gotham Large is 1.22 times more volatile than Swan Hedged Equity. It trades about 0.16 of its potential returns per unit of risk. Swan Hedged Equity is currently generating about 0.15 per unit of risk. If you would invest 1,437 in Gotham Large Value on September 1, 2024 and sell it today you would earn a total of 206.00 from holding Gotham Large Value or generate 14.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gotham Large Value vs. Swan Hedged Equity
Performance |
| Timeline |
| Gotham Large Value |
| Swan Hedged Equity |
Gotham Large and Swan Hedged Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gotham Large and Swan Hedged
The main advantage of trading using opposite Gotham Large and Swan Hedged positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gotham Large position performs unexpectedly, Swan Hedged 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 Swan Hedged will offset losses from the drop in Swan Hedged's long position.| Gotham Large vs. Gotham Index Plus | Gotham Large vs. Gotham Enhanced 500 | Gotham Large vs. Gotham Enhanced Return | Gotham Large vs. Aquagold International |
| Swan Hedged vs. Core Alternative ETF | Swan Hedged vs. Invesco SP 500 | Swan Hedged vs. ETF Series Solutions | Swan Hedged vs. WisdomTree Target Range |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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