Correlation Between Superior Plus and IncomeShares SP500

Can any of the company-specific risk be diversified away by investing in both Superior Plus and IncomeShares SP500 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 Superior Plus and IncomeShares SP500 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Superior Plus Corp and IncomeShares SP500 Options, you can compare the effects of market volatilities on Superior Plus and IncomeShares SP500 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 Superior Plus with a short position of IncomeShares SP500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and IncomeShares SP500.

Diversification Opportunities for Superior Plus and IncomeShares SP500

0.08

Correlation Coefficient

Superior Plus  IncomeShares SP500

Significant diversification

The 3 months correlation between Superior and IncomeShares is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and IncomeShares SP500 Options in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IncomeShares SP500 and Superior Plus 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 Superior Plus Corp are associated (or correlated) with IncomeShares SP500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IncomeShares SP500 has no effect on the direction of Superior Plus i.e., Superior Plus and IncomeShares SP500 go up and down completely randomly.

Pair Corralation between Superior Plus and IncomeShares SP500

Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the IncomeShares SP500. In addition to that, Superior Plus is 2.59 times more volatile than IncomeShares SP500 Options. It trades about -0.03 of its total potential returns per unit of risk. IncomeShares SP500 Options is currently generating about 0.06 per unit of volatility. If you would invest  860.00  in IncomeShares SP500 Options on October 9, 2024 and sell it today you would earn a total of  14.00  from holding IncomeShares SP500 Options or generate 1.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	6.6%
Values	Daily Returns

Superior Plus Corp  vs.  IncomeShares SP500 Options

Superior Plus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Superior Plus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

IncomeShares SP500

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in IncomeShares SP500 Options are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, IncomeShares SP500 is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Superior Plus and IncomeShares SP500

The main advantage of trading using opposite Superior Plus and IncomeShares SP500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus position performs unexpectedly, IncomeShares SP500 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 IncomeShares SP500 will offset losses from the drop in IncomeShares SP500's long position.

The idea behind Superior Plus Corp and IncomeShares SP500 Options pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.