Correlation Between Swan Hedged and Gotham Large
Can any of the company-specific risk be diversified away by investing in both Swan Hedged and Gotham Large 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 Swan Hedged and Gotham Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swan Hedged Equity and Gotham Large Value, you can compare the effects of market volatilities on Swan Hedged and Gotham Large 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 Swan Hedged with a short position of Gotham Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swan Hedged and Gotham Large.
Diversification Opportunities for Swan Hedged and Gotham Large
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Swan and Gotham is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Swan Hedged Equity and Gotham Large Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gotham Large Value and Swan Hedged 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 Swan Hedged Equity are associated (or correlated) with Gotham Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gotham Large Value has no effect on the direction of Swan Hedged i.e., Swan Hedged and Gotham Large go up and down completely randomly.
Pair Corralation between Swan Hedged and Gotham Large
Given the investment horizon of 90 days Swan Hedged is expected to generate 1.29 times less return on investment than Gotham Large. But when comparing it to its historical volatility, Swan Hedged Equity is 1.22 times less risky than Gotham Large. It trades about 0.15 of its potential returns per unit of risk. Gotham Large Value is currently generating about 0.16 of returns per unit of risk over similar time horizon. 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 |
Swan Hedged Equity vs. Gotham Large Value
Performance |
| Timeline |
| Swan Hedged Equity |
| Gotham Large Value |
Swan Hedged and Gotham Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swan Hedged and Gotham Large
The main advantage of trading using opposite Swan Hedged and Gotham Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swan Hedged position performs unexpectedly, Gotham Large 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 Gotham Large will offset losses from the drop in Gotham Large's long position.| Swan Hedged vs. Core Alternative ETF | Swan Hedged vs. Invesco SP 500 | Swan Hedged vs. ETF Series Solutions | Swan Hedged vs. WisdomTree Target Range |
| Gotham Large vs. Gotham Index Plus | Gotham Large vs. Gotham Enhanced 500 | Gotham Large vs. Gotham Enhanced Return | Gotham Large vs. Aquagold International |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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