Correlation Between STF Tactical and ETF Series
Can any of the company-specific risk be diversified away by investing in both STF Tactical and ETF 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 STF Tactical and ETF Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STF Tactical Growth and ETF Series Solutions, you can compare the effects of market volatilities on STF Tactical and ETF 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 STF Tactical with a short position of ETF Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of STF Tactical and ETF Series.
Diversification Opportunities for STF Tactical and ETF Series
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between STF and ETF is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding STF Tactical Growth and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions and STF Tactical 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 STF Tactical Growth are associated (or correlated) with ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of STF Tactical i.e., STF Tactical and ETF Series go up and down completely randomly.
Pair Corralation between STF Tactical and ETF Series
Considering the 90-day investment horizon STF Tactical Growth is expected to generate 1.41 times more return on investment than ETF Series. However, STF Tactical is 1.41 times more volatile than ETF Series Solutions. It trades about 0.14 of its potential returns per unit of risk. ETF Series Solutions is currently generating about 0.13 per unit of risk. If you would invest 3,345 in STF Tactical Growth on August 24, 2024 and sell it today you would earn a total of 120.00 from holding STF Tactical Growth or generate 3.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
STF Tactical Growth vs. ETF Series Solutions
Performance |
| Timeline |
| STF Tactical Growth |
| ETF Series Solutions |
STF Tactical and ETF Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STF Tactical and ETF Series
The main advantage of trading using opposite STF Tactical and ETF Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STF Tactical position performs unexpectedly, ETF 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 ETF Series will offset losses from the drop in ETF Series' long position.| STF Tactical vs. iShares Core Growth | STF Tactical vs. Alpha Architect Gdsdn | STF Tactical vs. VanEck Inflation Allocation | STF Tactical vs. ClearShares OCIO ETF |
| ETF Series vs. iShares Core Growth | ETF Series vs. Alpha Architect Gdsdn | ETF Series vs. VanEck Inflation Allocation | ETF Series vs. ClearShares OCIO ETF |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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