Correlation Between ETRACS 2xMonthly and ETRACS Alerian
Can any of the company-specific risk be diversified away by investing in both ETRACS 2xMonthly and ETRACS Alerian 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 2xMonthly and ETRACS Alerian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETRACS 2xMonthly Pay and ETRACS Alerian Midstream, you can compare the effects of market volatilities on ETRACS 2xMonthly and ETRACS Alerian 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 2xMonthly with a short position of ETRACS Alerian. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS 2xMonthly and ETRACS Alerian.
Diversification Opportunities for ETRACS 2xMonthly and ETRACS Alerian
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between ETRACS and ETRACS is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS 2xMonthly Pay and ETRACS Alerian Midstream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETRACS Alerian Midstream and ETRACS 2xMonthly 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 2xMonthly Pay are associated (or correlated) with ETRACS Alerian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETRACS Alerian Midstream has no effect on the direction of ETRACS 2xMonthly i.e., ETRACS 2xMonthly and ETRACS Alerian go up and down completely randomly.
Pair Corralation between ETRACS 2xMonthly and ETRACS Alerian
Given the investment horizon of 90 days ETRACS 2xMonthly is expected to generate 2.35 times less return on investment than ETRACS Alerian. In addition to that, ETRACS 2xMonthly is 1.88 times more volatile than ETRACS Alerian Midstream. It trades about 0.04 of its total potential returns per unit of risk. ETRACS Alerian Midstream is currently generating about 0.18 per unit of volatility. If you would invest 3,503 in ETRACS Alerian Midstream on August 26, 2024 and sell it today you would earn a total of 2,144 from holding ETRACS Alerian Midstream or generate 61.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETRACS 2xMonthly Pay vs. ETRACS Alerian Midstream
Performance |
| Timeline |
| ETRACS 2xMonthly Pay |
| ETRACS Alerian Midstream |
ETRACS 2xMonthly and ETRACS Alerian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETRACS 2xMonthly and ETRACS Alerian
The main advantage of trading using opposite ETRACS 2xMonthly and ETRACS Alerian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS 2xMonthly position performs unexpectedly, ETRACS Alerian 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 Alerian will offset losses from the drop in ETRACS Alerian's long position.| ETRACS 2xMonthly vs. ProShares VIX Short Term | ETRACS 2xMonthly vs. ProShares UltraShort Yen | ETRACS 2xMonthly vs. iPath Series B |
| ETRACS Alerian vs. UBS AG London | ETRACS Alerian vs. ETRACS 2xMonthly Pay | ETRACS Alerian vs. UBS AG London |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |