Correlation Between Perpetual Credit and ETFS FANG
Can any of the company-specific risk be diversified away by investing in both Perpetual Credit and ETFS FANG 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 Perpetual Credit and ETFS FANG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Perpetual Credit Income and ETFS FANG ETF, you can compare the effects of market volatilities on Perpetual Credit and ETFS FANG 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 Perpetual Credit with a short position of ETFS FANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perpetual Credit and ETFS FANG.
Diversification Opportunities for Perpetual Credit and ETFS FANG
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Perpetual and ETFS is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Perpetual Credit Income and ETFS FANG ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFS FANG ETF and Perpetual Credit 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 Perpetual Credit Income are associated (or correlated) with ETFS FANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFS FANG ETF has no effect on the direction of Perpetual Credit i.e., Perpetual Credit and ETFS FANG go up and down completely randomly.
Pair Corralation between Perpetual Credit and ETFS FANG
Assuming the 90 days trading horizon Perpetual Credit is expected to generate 3.34 times less return on investment than ETFS FANG. In addition to that, Perpetual Credit is 1.09 times more volatile than ETFS FANG ETF. It trades about 0.07 of its total potential returns per unit of risk. ETFS FANG ETF is currently generating about 0.26 per unit of volatility. If you would invest 2,763 in ETFS FANG ETF on September 3, 2024 and sell it today you would earn a total of 177.00 from holding ETFS FANG ETF or generate 6.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Perpetual Credit Income vs. ETFS FANG ETF
Performance |
| Timeline |
| Perpetual Credit Income |
| ETFS FANG ETF |
Perpetual Credit and ETFS FANG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Perpetual Credit and ETFS FANG
The main advantage of trading using opposite Perpetual Credit and ETFS FANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perpetual Credit position performs unexpectedly, ETFS FANG 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 ETFS FANG will offset losses from the drop in ETFS FANG's long position.| Perpetual Credit vs. Champion Iron | Perpetual Credit vs. iShares Global Healthcare | Perpetual Credit vs. Peel Mining | Perpetual Credit vs. Australian Dairy Farms |
| ETFS FANG vs. ETFS Battery Tech | ETFS FANG vs. ETFS Ultra Long | ETFS FANG vs. ETFS Ultra Short | ETFS FANG vs. ETFS SP Biotech |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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