Correlation Between FT Cboe and 50249AAJ2

Can any of the company-specific risk be diversified away by investing in both FT Cboe and 50249AAJ2 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 50249AAJ2 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 LYB INTERNATIONAL FINANCE, you can compare the effects of market volatilities on FT Cboe and 50249AAJ2 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 50249AAJ2. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Cboe and 50249AAJ2.

Diversification Opportunities for FT Cboe and 50249AAJ2

0.01

Correlation Coefficient

FT Cboe  50249AAJ2

Significant diversification

The 3 months correlation between BUFQ and 50249AAJ2 is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding FT Cboe Vest and LYB INTERNATIONAL FINANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LYB INTERNATIONAL FINANCE 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 50249AAJ2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LYB INTERNATIONAL FINANCE has no effect on the direction of FT Cboe i.e., FT Cboe and 50249AAJ2 go up and down completely randomly.

Pair Corralation between FT Cboe and 50249AAJ2

Given the investment horizon of 90 days FT Cboe Vest is expected to under-perform the 50249AAJ2. But the etf apears to be less risky and, when comparing its historical volatility, FT Cboe Vest is 1.0 times less risky than 50249AAJ2. The etf trades about -0.06 of its potential returns per unit of risk. The LYB INTERNATIONAL FINANCE is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  6,766  in LYB INTERNATIONAL FINANCE on December 29, 2024 and sell it today you would earn a total of  2.00  from holding LYB INTERNATIONAL FINANCE or generate 0.03% return on investment over 90 days.

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

FT Cboe Vest  vs.  LYB INTERNATIONAL FINANCE

FT Cboe Vest

Risk-Adjusted Performance

Very Weak

Over the last 90 days FT Cboe Vest has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, FT Cboe is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

LYB INTERNATIONAL FINANCE

Risk-Adjusted Performance

Very Weak

Over the last 90 days LYB INTERNATIONAL FINANCE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 50249AAJ2 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FT Cboe and 50249AAJ2

The main advantage of trading using opposite FT Cboe and 50249AAJ2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT Cboe position performs unexpectedly, 50249AAJ2 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 50249AAJ2 will offset losses from the drop in 50249AAJ2's long position.

The idea behind FT Cboe Vest and LYB INTERNATIONAL FINANCE 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.