Correlation Between Extended Market and Gateway Equity
Can any of the company-specific risk be diversified away by investing in both Extended Market and Gateway Equity 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 Extended Market and Gateway Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Extended Market Index and Gateway Equity Call, you can compare the effects of market volatilities on Extended Market and Gateway Equity 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 Extended Market with a short position of Gateway Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extended Market and Gateway Equity.
Diversification Opportunities for Extended Market and Gateway Equity
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Extended and Gateway is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Extended Market Index and Gateway Equity Call in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gateway Equity Call and Extended Market 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 Extended Market Index are associated (or correlated) with Gateway Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gateway Equity Call has no effect on the direction of Extended Market i.e., Extended Market and Gateway Equity go up and down completely randomly.
Pair Corralation between Extended Market and Gateway Equity
Assuming the 90 days horizon Extended Market is expected to generate 1.62 times less return on investment than Gateway Equity. In addition to that, Extended Market is 2.3 times more volatile than Gateway Equity Call. It trades about 0.03 of its total potential returns per unit of risk. Gateway Equity Call is currently generating about 0.11 per unit of volatility. If you would invest 1,489 in Gateway Equity Call on October 21, 2024 and sell it today you would earn a total of 500.00 from holding Gateway Equity Call or generate 33.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Extended Market Index vs. Gateway Equity Call
Performance |
| Timeline |
| Extended Market Index |
| Gateway Equity Call |
Extended Market and Gateway Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extended Market and Gateway Equity
The main advantage of trading using opposite Extended Market and Gateway Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extended Market position performs unexpectedly, Gateway Equity 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 Gateway Equity will offset losses from the drop in Gateway Equity's long position.| Extended Market vs. Lord Abbett Vertible | Extended Market vs. Absolute Convertible Arbitrage | Extended Market vs. Virtus Convertible | Extended Market vs. Calamos Vertible Fund |
| Gateway Equity vs. Extended Market Index | Gateway Equity vs. Oshaughnessy Market Leaders | Gateway Equity vs. Locorr Market Trend | Gateway Equity vs. Kinetics Market Opportunities |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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