Correlation Between Small-midcap Dividend and Natixis Sustainable
Can any of the company-specific risk be diversified away by investing in both Small-midcap Dividend and Natixis Sustainable 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 Small-midcap Dividend and Natixis Sustainable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Midcap Dividend Income and Natixis Sustainable Future, you can compare the effects of market volatilities on Small-midcap Dividend and Natixis Sustainable 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 Small-midcap Dividend with a short position of Natixis Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small-midcap Dividend and Natixis Sustainable.
Diversification Opportunities for Small-midcap Dividend and Natixis Sustainable
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Small-midcap and Natixis is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Small Midcap Dividend Income and Natixis Sustainable Future in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natixis Sustainable and Small-midcap Dividend 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 Small Midcap Dividend Income are associated (or correlated) with Natixis Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natixis Sustainable has no effect on the direction of Small-midcap Dividend i.e., Small-midcap Dividend and Natixis Sustainable go up and down completely randomly.
Pair Corralation between Small-midcap Dividend and Natixis Sustainable
Assuming the 90 days horizon Small Midcap Dividend Income is expected to under-perform the Natixis Sustainable. In addition to that, Small-midcap Dividend is 1.19 times more volatile than Natixis Sustainable Future. It trades about -0.21 of its total potential returns per unit of risk. Natixis Sustainable Future is currently generating about -0.09 per unit of volatility. If you would invest 1,332 in Natixis Sustainable Future on December 1, 2024 and sell it today you would lose (15.00) from holding Natixis Sustainable Future or give up 1.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Midcap Dividend Income vs. Natixis Sustainable Future
Performance |
| Timeline |
| Small Midcap Dividend |
| Natixis Sustainable |
Small-midcap Dividend and Natixis Sustainable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small-midcap Dividend and Natixis Sustainable
The main advantage of trading using opposite Small-midcap Dividend and Natixis Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small-midcap Dividend position performs unexpectedly, Natixis Sustainable 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 Natixis Sustainable will offset losses from the drop in Natixis Sustainable's long position.The idea behind Small Midcap Dividend Income and Natixis Sustainable Future pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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