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 Quality 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
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between WBI and DNOV is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding WBI BullBear Quality 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 Quality 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 Quality is expected to generate 5.23 times more return on investment than FT Cboe. However, WBI BullBear is 5.23 times more volatile than FT Cboe Vest. It trades about 0.12 of its potential returns per unit of risk. FT Cboe Vest is currently generating about 0.54 per unit of risk. If you would invest 3,629 in WBI BullBear Quality on September 12, 2024 and sell it today you would earn a total of 78.46 from holding WBI BullBear Quality or generate 2.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WBI BullBear Quality vs. FT Cboe Vest
Performance |
| Timeline |
| WBI BullBear Quality |
| 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. JPMorgan Fundamental Data |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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