Correlation Between ETRACS IFED and Freedom Day
Can any of the company-specific risk be diversified away by investing in both ETRACS IFED and Freedom Day 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 ETRACS IFED and Freedom Day into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETRACS IFED Invest and Freedom Day Dividend, you can compare the effects of market volatilities on ETRACS IFED and Freedom Day 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 ETRACS IFED with a short position of Freedom Day. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS IFED and Freedom Day.
Diversification Opportunities for ETRACS IFED and Freedom Day
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ETRACS and Freedom is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS IFED Invest and Freedom Day Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Day Dividend and ETRACS IFED 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 ETRACS IFED Invest are associated (or correlated) with Freedom Day. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Day Dividend has no effect on the direction of ETRACS IFED i.e., ETRACS IFED and Freedom Day go up and down completely randomly.
Pair Corralation between ETRACS IFED and Freedom Day
Given the investment horizon of 90 days ETRACS IFED Invest is expected to generate 1.31 times more return on investment than Freedom Day. However, ETRACS IFED is 1.31 times more volatile than Freedom Day Dividend. It trades about 0.33 of its potential returns per unit of risk. Freedom Day Dividend is currently generating about 0.3 per unit of risk. If you would invest 3,926 in ETRACS IFED Invest on August 30, 2024 and sell it today you would earn a total of 330.00 from holding ETRACS IFED Invest or generate 8.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETRACS IFED Invest vs. Freedom Day Dividend
Performance |
| Timeline |
| ETRACS IFED Invest |
| Freedom Day Dividend |
ETRACS IFED and Freedom Day Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETRACS IFED and Freedom Day
The main advantage of trading using opposite ETRACS IFED and Freedom Day positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS IFED position performs unexpectedly, Freedom Day 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 Freedom Day will offset losses from the drop in Freedom Day's long position.| ETRACS IFED vs. Freedom Day Dividend | ETRACS IFED vs. Franklin Templeton ETF | ETRACS IFED vs. iShares MSCI China | ETRACS IFED vs. Tidal Trust II |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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