Correlation Between Roundhill Investments and SHP ETF
Can any of the company-specific risk be diversified away by investing in both Roundhill Investments and SHP ETF 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 Investments and SHP ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roundhill Investments and SHP ETF Trust, you can compare the effects of market volatilities on Roundhill Investments and SHP ETF 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 Investments with a short position of SHP ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roundhill Investments and SHP ETF.
Diversification Opportunities for Roundhill Investments and SHP ETF
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Roundhill and SHP is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Roundhill Investments and SHP ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHP ETF Trust and Roundhill Investments 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 Investments are associated (or correlated) with SHP ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHP ETF Trust has no effect on the direction of Roundhill Investments i.e., Roundhill Investments and SHP ETF go up and down completely randomly.
Pair Corralation between Roundhill Investments and SHP ETF
Given the investment horizon of 90 days Roundhill Investments is expected to generate 4.01 times more return on investment than SHP ETF. However, Roundhill Investments is 4.01 times more volatile than SHP ETF Trust. It trades about 0.08 of its potential returns per unit of risk. SHP ETF Trust is currently generating about 0.11 per unit of risk. If you would invest 3,091 in Roundhill Investments on August 26, 2024 and sell it today you would earn a total of 975.00 from holding Roundhill Investments or generate 31.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 31.99% |
| Values | Daily Returns |
Roundhill Investments vs. SHP ETF Trust
Performance |
| Timeline |
| Roundhill Investments |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| SHP ETF Trust |
Roundhill Investments and SHP ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roundhill Investments and SHP ETF
The main advantage of trading using opposite Roundhill Investments and SHP ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roundhill Investments position performs unexpectedly, SHP ETF 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 SHP ETF will offset losses from the drop in SHP ETF's long position.| Roundhill Investments vs. SoFi Social 50 | Roundhill Investments vs. Global X Blockchain | Roundhill Investments vs. Tuttle Capital Short |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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