Correlation Between Roundhill Magnificent and Freedom 100
Can any of the company-specific risk be diversified away by investing in both Roundhill Magnificent and Freedom 100 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 Roundhill Magnificent and Freedom 100 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roundhill Magnificent Seven and Freedom 100 Emerging, you can compare the effects of market volatilities on Roundhill Magnificent and Freedom 100 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 Roundhill Magnificent with a short position of Freedom 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roundhill Magnificent and Freedom 100.
Diversification Opportunities for Roundhill Magnificent and Freedom 100
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Roundhill and Freedom is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Roundhill Magnificent Seven and Freedom 100 Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom 100 Emerging and Roundhill Magnificent 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 Roundhill Magnificent Seven are associated (or correlated) with Freedom 100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom 100 Emerging has no effect on the direction of Roundhill Magnificent i.e., Roundhill Magnificent and Freedom 100 go up and down completely randomly.
Pair Corralation between Roundhill Magnificent and Freedom 100
Given the investment horizon of 90 days Roundhill Magnificent Seven is expected to under-perform the Freedom 100. In addition to that, Roundhill Magnificent is 1.54 times more volatile than Freedom 100 Emerging. It trades about -0.05 of its total potential returns per unit of risk. Freedom 100 Emerging is currently generating about 0.08 per unit of volatility. If you would invest 3,407 in Freedom 100 Emerging on November 5, 2024 and sell it today you would earn a total of 50.00 from holding Freedom 100 Emerging or generate 1.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Roundhill Magnificent Seven vs. Freedom 100 Emerging
Performance |
| Timeline |
| Roundhill Magnificent |
| Freedom 100 Emerging |
Roundhill Magnificent and Freedom 100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roundhill Magnificent and Freedom 100
The main advantage of trading using opposite Roundhill Magnificent and Freedom 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roundhill Magnificent position performs unexpectedly, Freedom 100 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 100 will offset losses from the drop in Freedom 100's long position.| Roundhill Magnificent vs. Tidal Trust III | Roundhill Magnificent vs. FT Cboe Vest | Roundhill Magnificent vs. Bitwise Funds Trust | Roundhill Magnificent vs. FT Vest Equity |
| Freedom 100 vs. Horizon Kinetics Inflation | Freedom 100 vs. iShares MSCI Emerging | Freedom 100 vs. iShares Emerging Markets | Freedom 100 vs. WisdomTree International High |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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