Correlation Between FT Cboe and TrueShares Structured

Can any of the company-specific risk be diversified away by investing in both FT Cboe and TrueShares Structured 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 FT Cboe and TrueShares Structured into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FT Cboe Vest and TrueShares Structured Outcome, you can compare the effects of market volatilities on FT Cboe and TrueShares Structured 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 FT Cboe with a short position of TrueShares Structured. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Cboe and TrueShares Structured.

Diversification Opportunities for FT Cboe and TrueShares Structured

0.99

Correlation Coefficient

FT Cboe  TrueShares Structured

No risk reduction

The 3 months correlation between BUFD and TrueShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding FT Cboe Vest and TrueShares Structured Outcome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrueShares Structured and FT Cboe 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 FT Cboe Vest are associated (or correlated) with TrueShares Structured. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TrueShares Structured has no effect on the direction of FT Cboe i.e., FT Cboe and TrueShares Structured go up and down completely randomly.

Pair Corralation between FT Cboe and TrueShares Structured

Given the investment horizon of 90 days FT Cboe is expected to generate 1.87 times less return on investment than TrueShares Structured. But when comparing it to its historical volatility, FT Cboe Vest is 1.86 times less risky than TrueShares Structured. It trades about 0.19 of its potential returns per unit of risk. TrueShares Structured Outcome is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  3,822  in TrueShares Structured Outcome on September 13, 2024 and sell it today you would earn a total of  244.47  from holding TrueShares Structured Outcome or generate 6.4% return on investment over 90 days.

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

FT Cboe Vest  vs.  TrueShares Structured Outcome

FT Cboe Vest

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FT Cboe Vest are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, FT Cboe is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

TrueShares Structured

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TrueShares Structured Outcome are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, TrueShares Structured is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FT Cboe and TrueShares Structured

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

The idea behind FT Cboe Vest and TrueShares Structured Outcome 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.