Correlation Between Defiance Nasdaq and FT Cboe
Can any of the company-specific risk be diversified away by investing in both Defiance Nasdaq and FT Cboe 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 Defiance Nasdaq and FT Cboe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Defiance Nasdaq 100 and FT Cboe Vest, you can compare the effects of market volatilities on Defiance Nasdaq and FT Cboe 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 Defiance Nasdaq with a short position of FT Cboe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Defiance Nasdaq and FT Cboe.
Diversification Opportunities for Defiance Nasdaq and FT Cboe
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Defiance and KNG is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Defiance Nasdaq 100 and FT Cboe Vest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Cboe Vest and Defiance Nasdaq 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 Defiance Nasdaq 100 are associated (or correlated) with FT Cboe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Cboe Vest has no effect on the direction of Defiance Nasdaq i.e., Defiance Nasdaq and FT Cboe go up and down completely randomly.
Pair Corralation between Defiance Nasdaq and FT Cboe
Given the investment horizon of 90 days Defiance Nasdaq 100 is expected to generate 2.09 times more return on investment than FT Cboe. However, Defiance Nasdaq is 2.09 times more volatile than FT Cboe Vest. It trades about 0.23 of its potential returns per unit of risk. FT Cboe Vest is currently generating about 0.36 per unit of risk. If you would invest 1,852 in Defiance Nasdaq 100 on September 1, 2024 and sell it today you would earn a total of 92.00 from holding Defiance Nasdaq 100 or generate 4.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Defiance Nasdaq 100 vs. FT Cboe Vest
Performance |
| Timeline |
| Defiance Nasdaq 100 |
| FT Cboe Vest |
Defiance Nasdaq and FT Cboe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Defiance Nasdaq and FT Cboe
The main advantage of trading using opposite Defiance Nasdaq and FT Cboe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Defiance Nasdaq position performs unexpectedly, FT Cboe 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 FT Cboe will offset losses from the drop in FT Cboe's long position.| Defiance Nasdaq vs. Global X SP | Defiance Nasdaq vs. Amplify CWP Enhanced | Defiance Nasdaq vs. JPMorgan Equity Premium |
| FT Cboe vs. Global X SP | FT Cboe vs. Global X Nasdaq | FT Cboe vs. First Trust BuyWrite | FT Cboe vs. Amplify CWP Enhanced |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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