Correlation Between IPath Series and Dividend Performers
Can any of the company-specific risk be diversified away by investing in both IPath Series and Dividend Performers 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 IPath Series and Dividend Performers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iPath Series B and Dividend Performers ETF, you can compare the effects of market volatilities on IPath Series and Dividend Performers 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 IPath Series with a short position of Dividend Performers. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPath Series and Dividend Performers.
Diversification Opportunities for IPath Series and Dividend Performers
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IPath and Dividend is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding iPath Series B and Dividend Performers ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dividend Performers ETF and IPath Series 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 iPath Series B are associated (or correlated) with Dividend Performers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dividend Performers ETF has no effect on the direction of IPath Series i.e., IPath Series and Dividend Performers go up and down completely randomly.
Pair Corralation between IPath Series and Dividend Performers
Considering the 90-day investment horizon iPath Series B is expected to under-perform the Dividend Performers. In addition to that, IPath Series is 3.78 times more volatile than Dividend Performers ETF. It trades about -0.06 of its total potential returns per unit of risk. Dividend Performers ETF is currently generating about 0.19 per unit of volatility. If you would invest 1,941 in Dividend Performers ETF on October 24, 2024 and sell it today you would earn a total of 73.00 from holding Dividend Performers ETF or generate 3.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
iPath Series B vs. Dividend Performers ETF
Performance |
| Timeline |
| iPath Series B |
| Dividend Performers ETF |
IPath Series and Dividend Performers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPath Series and Dividend Performers
The main advantage of trading using opposite IPath Series and Dividend Performers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPath Series position performs unexpectedly, Dividend Performers 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 Dividend Performers will offset losses from the drop in Dividend Performers' long position.| 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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