Correlation Between Freedom Day and ETRACS IFED
Can any of the company-specific risk be diversified away by investing in both Freedom Day and ETRACS IFED 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 Freedom Day and ETRACS IFED into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freedom Day Dividend and ETRACS IFED Invest, you can compare the effects of market volatilities on Freedom Day and ETRACS IFED 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 Freedom Day with a short position of ETRACS IFED. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Day and ETRACS IFED.
Diversification Opportunities for Freedom Day and ETRACS IFED
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Freedom and ETRACS is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Day Dividend and ETRACS IFED Invest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETRACS IFED Invest and Freedom Day 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 Freedom Day Dividend are associated (or correlated) with ETRACS IFED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETRACS IFED Invest has no effect on the direction of Freedom Day i.e., Freedom Day and ETRACS IFED go up and down completely randomly.
Pair Corralation between Freedom Day and ETRACS IFED
Given the investment horizon of 90 days Freedom Day is expected to generate 1.42 times less return on investment than ETRACS IFED. But when comparing it to its historical volatility, Freedom Day Dividend is 1.28 times less risky than ETRACS IFED. It trades about 0.36 of its potential returns per unit of risk. ETRACS IFED Invest is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 3,891 in ETRACS IFED Invest on September 1, 2024 and sell it today you would earn a total of 382.00 from holding ETRACS IFED Invest or generate 9.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Freedom Day Dividend vs. ETRACS IFED Invest
Performance |
| Timeline |
| Freedom Day Dividend |
| ETRACS IFED Invest |
Freedom Day and ETRACS IFED Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Day and ETRACS IFED
The main advantage of trading using opposite Freedom Day and ETRACS IFED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Day position performs unexpectedly, ETRACS IFED 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 ETRACS IFED will offset losses from the drop in ETRACS IFED's long position.| Freedom Day vs. iShares Core SP | Freedom Day vs. iShares Core MSCI | Freedom Day vs. iShares Broad USD | Freedom Day vs. iShares Core SP |
| ETRACS IFED vs. Vanguard Total Stock | ETRACS IFED vs. SPDR SP 500 | ETRACS IFED vs. iShares Core SP | ETRACS IFED vs. Vanguard Dividend Appreciation |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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