Correlation Between ETRACS 2x and SmartETFs Dividend
Can any of the company-specific risk be diversified away by investing in both ETRACS 2x and SmartETFs Dividend 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 2x and SmartETFs Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETRACS 2x Leveraged and SmartETFs Dividend Builder, you can compare the effects of market volatilities on ETRACS 2x and SmartETFs Dividend 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 2x with a short position of SmartETFs Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS 2x and SmartETFs Dividend.
Diversification Opportunities for ETRACS 2x and SmartETFs Dividend
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ETRACS and SmartETFs is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS 2x Leveraged and SmartETFs Dividend Builder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartETFs Dividend and ETRACS 2x 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 2x Leveraged are associated (or correlated) with SmartETFs Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartETFs Dividend has no effect on the direction of ETRACS 2x i.e., ETRACS 2x and SmartETFs Dividend go up and down completely randomly.
Pair Corralation between ETRACS 2x and SmartETFs Dividend
Given the investment horizon of 90 days ETRACS 2x Leveraged is expected to generate 3.23 times more return on investment than SmartETFs Dividend. However, ETRACS 2x is 3.23 times more volatile than SmartETFs Dividend Builder. It trades about 0.07 of its potential returns per unit of risk. SmartETFs Dividend Builder is currently generating about 0.09 per unit of risk. If you would invest 1,725 in ETRACS 2x Leveraged on September 3, 2024 and sell it today you would earn a total of 1,474 from holding ETRACS 2x Leveraged or generate 85.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETRACS 2x Leveraged vs. SmartETFs Dividend Builder
Performance |
| Timeline |
| ETRACS 2x Leveraged |
| SmartETFs Dividend |
ETRACS 2x and SmartETFs Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETRACS 2x and SmartETFs Dividend
The main advantage of trading using opposite ETRACS 2x and SmartETFs Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS 2x position performs unexpectedly, SmartETFs Dividend 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 SmartETFs Dividend will offset losses from the drop in SmartETFs Dividend's long position.| ETRACS 2x vs. Freedom Day Dividend | ETRACS 2x vs. iShares MSCI China | ETRACS 2x vs. SmartETFs Dividend Builder | ETRACS 2x vs. Tidal ETF Trust |
| SmartETFs Dividend vs. SmartETFs Asia Pacific | SmartETFs Dividend vs. Listed Funds Trust | SmartETFs Dividend vs. iShares AsiaPacific Dividend | SmartETFs Dividend vs. ProShares MSCI Emerging |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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