Correlation Between WBI BullBear and FT Cboe
Can any of the company-specific risk be diversified away by investing in both WBI BullBear 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 WBI BullBear and FT Cboe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WBI BullBear Value and FT Cboe Vest, you can compare the effects of market volatilities on WBI BullBear 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 WBI BullBear with a short position of FT Cboe. Check out your portfolio center. Please also check ongoing floating volatility patterns of WBI BullBear and FT Cboe.
Diversification Opportunities for WBI BullBear and FT Cboe
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WBI and DJUN is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding WBI BullBear Value 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 WBI BullBear 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 WBI BullBear Value 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 WBI BullBear i.e., WBI BullBear and FT Cboe go up and down completely randomly.
Pair Corralation between WBI BullBear and FT Cboe
Given the investment horizon of 90 days WBI BullBear Value is expected to generate 2.18 times more return on investment than FT Cboe. However, WBI BullBear is 2.18 times more volatile than FT Cboe Vest. It trades about 0.36 of its potential returns per unit of risk. FT Cboe Vest is currently generating about 0.37 per unit of risk. If you would invest 2,883 in WBI BullBear Value on September 2, 2024 and sell it today you would earn a total of 187.00 from holding WBI BullBear Value or generate 6.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WBI BullBear Value vs. FT Cboe Vest
Performance |
| Timeline |
| WBI BullBear Value |
| FT Cboe Vest |
WBI BullBear and FT Cboe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WBI BullBear and FT Cboe
The main advantage of trading using opposite WBI BullBear and FT Cboe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WBI BullBear 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.| WBI BullBear vs. FT Vest Equity | WBI BullBear vs. Northern Lights | WBI BullBear vs. Dimensional International High | WBI BullBear vs. Matthews China Discovery |
| FT Cboe vs. First Trust Exchange Traded | FT Cboe vs. FT Cboe Vest | FT Cboe vs. FT Cboe Vest | FT Cboe vs. FT Cboe Vest |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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