Correlation Between ETRACS Monthly and ETRACS 2xMonthly
Can any of the company-specific risk be diversified away by investing in both ETRACS Monthly and ETRACS 2xMonthly 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 Monthly and ETRACS 2xMonthly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETRACS Monthly Pay and ETRACS 2xMonthly Pay, you can compare the effects of market volatilities on ETRACS Monthly and ETRACS 2xMonthly 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 Monthly with a short position of ETRACS 2xMonthly. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS Monthly and ETRACS 2xMonthly.
Diversification Opportunities for ETRACS Monthly and ETRACS 2xMonthly
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ETRACS and ETRACS is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS Monthly Pay and ETRACS 2xMonthly Pay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETRACS 2xMonthly Pay and ETRACS Monthly 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 Monthly Pay are associated (or correlated) with ETRACS 2xMonthly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETRACS 2xMonthly Pay has no effect on the direction of ETRACS Monthly i.e., ETRACS Monthly and ETRACS 2xMonthly go up and down completely randomly.
Pair Corralation between ETRACS Monthly and ETRACS 2xMonthly
Given the investment horizon of 90 days ETRACS Monthly Pay is expected to generate 0.78 times more return on investment than ETRACS 2xMonthly. However, ETRACS Monthly Pay is 1.28 times less risky than ETRACS 2xMonthly. It trades about 0.04 of its potential returns per unit of risk. ETRACS 2xMonthly Pay is currently generating about -0.02 per unit of risk. If you would invest 1,675 in ETRACS Monthly Pay on August 29, 2024 and sell it today you would earn a total of 16.00 from holding ETRACS Monthly Pay or generate 0.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETRACS Monthly Pay vs. ETRACS 2xMonthly Pay
Performance |
| Timeline |
| ETRACS Monthly Pay |
| ETRACS 2xMonthly Pay |
ETRACS Monthly and ETRACS 2xMonthly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETRACS Monthly and ETRACS 2xMonthly
The main advantage of trading using opposite ETRACS Monthly and ETRACS 2xMonthly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS Monthly position performs unexpectedly, ETRACS 2xMonthly 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 2xMonthly will offset losses from the drop in ETRACS 2xMonthly's long position.| ETRACS Monthly vs. ETRACS 2xMonthly Pay | ETRACS Monthly vs. ETRACS Monthly Pay | ETRACS Monthly vs. ETRACS Monthly Pay | ETRACS Monthly vs. ETRACS 2xMonthly Pay |
| ETRACS 2xMonthly vs. ETRACS Monthly Pay | ETRACS 2xMonthly vs. ETRACS 2xMonthly Pay | ETRACS 2xMonthly vs. ETRACS Monthly Pay | ETRACS 2xMonthly vs. ETRACS Monthly Pay |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |