Correlation Between FT Cboe and Main Buywrite
Can any of the company-specific risk be diversified away by investing in both FT Cboe and Main Buywrite 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 FT Cboe and Main Buywrite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FT Cboe Vest and Main Buywrite ETF, you can compare the effects of market volatilities on FT Cboe and Main Buywrite 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 FT Cboe with a short position of Main Buywrite. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Cboe and Main Buywrite.
Diversification Opportunities for FT Cboe and Main Buywrite
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KNG and Main is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding FT Cboe Vest and Main Buywrite ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Main Buywrite ETF and FT Cboe 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 FT Cboe Vest are associated (or correlated) with Main Buywrite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Main Buywrite ETF has no effect on the direction of FT Cboe i.e., FT Cboe and Main Buywrite go up and down completely randomly.
Pair Corralation between FT Cboe and Main Buywrite
Considering the 90-day investment horizon FT Cboe Vest is expected to generate 2.13 times more return on investment than Main Buywrite. However, FT Cboe is 2.13 times more volatile than Main Buywrite ETF. It trades about 0.34 of its potential returns per unit of risk. Main Buywrite ETF is currently generating about 0.13 per unit of risk. If you would invest 5,261 in FT Cboe Vest on September 2, 2024 and sell it today you would earn a total of 174.00 from holding FT Cboe Vest or generate 3.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FT Cboe Vest vs. Main Buywrite ETF
Performance |
| Timeline |
| FT Cboe Vest |
| Main Buywrite ETF |
FT Cboe and Main Buywrite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FT Cboe and Main Buywrite
The main advantage of trading using opposite FT Cboe and Main Buywrite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT Cboe position performs unexpectedly, Main Buywrite 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 Main Buywrite will offset losses from the drop in Main Buywrite's long position.The idea behind FT Cboe Vest and Main Buywrite ETF pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Main Buywrite vs. Main Sector Rotation | Main Buywrite vs. iShares Trust | Main Buywrite vs. Janus Detroit Street | Main Buywrite vs. Bondbloxx ETF Trust |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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