Correlation Between Australian High and ETFS ROBO

Can any of the company-specific risk be diversified away by investing in both Australian High and ETFS ROBO 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 Australian High and ETFS ROBO into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Australian High Interest and ETFS ROBO Global, you can compare the effects of market volatilities on Australian High and ETFS ROBO 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 Australian High with a short position of ETFS ROBO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian High and ETFS ROBO.

Diversification Opportunities for Australian High and ETFS ROBO

-0.46

Correlation Coefficient

Australian High  ETFS ROBO

Very good diversification

The 3 months correlation between Australian and ETFS is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Australian High Interest and ETFS ROBO Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFS ROBO Global and Australian High 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 Australian High Interest are associated (or correlated) with ETFS ROBO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFS ROBO Global has no effect on the direction of Australian High i.e., Australian High and ETFS ROBO go up and down completely randomly.

Pair Corralation between Australian High and ETFS ROBO

Assuming the 90 days trading horizon Australian High Interest is expected to generate 0.02 times more return on investment than ETFS ROBO. However, Australian High Interest is 50.19 times less risky than ETFS ROBO. It trades about 0.77 of its potential returns per unit of risk. ETFS ROBO Global is currently generating about -0.09 per unit of risk. If you would invest  4,974  in Australian High Interest on December 30, 2024 and sell it today you would earn a total of  53.00  from holding Australian High Interest or generate 1.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Australian High Interest  vs.  ETFS ROBO Global

Australian High Interest

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Australian High Interest are ranked lower than 60 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Australian High is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

ETFS ROBO Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days ETFS ROBO Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ETFS ROBO is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Australian High and ETFS ROBO

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

The idea behind Australian High Interest and ETFS ROBO Global 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.