Correlation Between ETRACS 2xMonthly and IPath Series
Can any of the company-specific risk be diversified away by investing in both ETRACS 2xMonthly and IPath Series 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 IPath Series 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 iPath Series B, you can compare the effects of market volatilities on ETRACS 2xMonthly and IPath Series 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 IPath Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS 2xMonthly and IPath Series.
Diversification Opportunities for ETRACS 2xMonthly and IPath Series
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ETRACS and IPath is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS 2xMonthly Pay and iPath Series B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iPath Series B 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 IPath Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iPath Series B has no effect on the direction of ETRACS 2xMonthly i.e., ETRACS 2xMonthly and IPath Series go up and down completely randomly.
Pair Corralation between ETRACS 2xMonthly and IPath Series
Given the investment horizon of 90 days ETRACS 2xMonthly Pay is expected to generate 0.28 times more return on investment than IPath Series. However, ETRACS 2xMonthly Pay is 3.54 times less risky than IPath Series. It trades about 0.06 of its potential returns per unit of risk. iPath Series B is currently generating about -0.02 per unit of risk. If you would invest 846.00 in ETRACS 2xMonthly Pay on September 3, 2024 and sell it today you would earn a total of 149.00 from holding ETRACS 2xMonthly Pay or generate 17.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETRACS 2xMonthly Pay vs. iPath Series B
Performance |
| Timeline |
| ETRACS 2xMonthly Pay |
| iPath Series B |
ETRACS 2xMonthly and IPath Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETRACS 2xMonthly and IPath Series
The main advantage of trading using opposite ETRACS 2xMonthly and IPath Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS 2xMonthly position performs unexpectedly, IPath Series 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 IPath Series will offset losses from the drop in IPath Series' 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 |
| IPath Series vs. ProShares Ultra VIX | IPath Series vs. ProShares Short VIX | IPath Series vs. ProShares UltraPro Short | IPath Series vs. iShares 20 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Commodity Directory Find actively traded commodities issued by global exchanges |