Correlation Between ETRACS 2xMonthly and Ocean Park
Can any of the company-specific risk be diversified away by investing in both ETRACS 2xMonthly and Ocean Park 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 Ocean Park 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 Ocean Park High, you can compare the effects of market volatilities on ETRACS 2xMonthly and Ocean Park 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 Ocean Park. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS 2xMonthly and Ocean Park.
Diversification Opportunities for ETRACS 2xMonthly and Ocean Park
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ETRACS and Ocean is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS 2xMonthly Pay and Ocean Park High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocean Park High 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 Ocean Park. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocean Park High has no effect on the direction of ETRACS 2xMonthly i.e., ETRACS 2xMonthly and Ocean Park go up and down completely randomly.
Pair Corralation between ETRACS 2xMonthly and Ocean Park
Given the investment horizon of 90 days ETRACS 2xMonthly Pay is expected to generate 7.66 times more return on investment than Ocean Park. However, ETRACS 2xMonthly is 7.66 times more volatile than Ocean Park High. It trades about 0.03 of its potential returns per unit of risk. Ocean Park High is currently generating about 0.12 per unit of risk. If you would invest 922.00 in ETRACS 2xMonthly Pay on November 18, 2024 and sell it today you would earn a total of 7.00 from holding ETRACS 2xMonthly Pay or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETRACS 2xMonthly Pay vs. Ocean Park High
Performance |
| Timeline |
| ETRACS 2xMonthly Pay |
| Ocean Park High |
ETRACS 2xMonthly and Ocean Park Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETRACS 2xMonthly and Ocean Park
The main advantage of trading using opposite ETRACS 2xMonthly and Ocean Park positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS 2xMonthly position performs unexpectedly, Ocean Park 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 Ocean Park will offset losses from the drop in Ocean Park's long position.| ETRACS 2xMonthly vs. ETRACS 2xMonthly Pay | ETRACS 2xMonthly vs. ETRACS Monthly Pay | ETRACS 2xMonthly vs. ETRACS Monthly Pay | ETRACS 2xMonthly vs. ETRACS Monthly Pay |
| Ocean Park vs. iShares iBoxx High | Ocean Park vs. iShares Broad USD | Ocean Park vs. SPDR Bloomberg High | Ocean Park vs. iShares 0 5 Year |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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