Correlation Between Main Buywrite and Dividend Performers

Can any of the company-specific risk be diversified away by investing in both Main Buywrite and Dividend Performers 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 Main Buywrite and Dividend Performers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Main Buywrite ETF and Dividend Performers ETF, you can compare the effects of market volatilities on Main Buywrite and Dividend Performers 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 Main Buywrite with a short position of Dividend Performers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Buywrite and Dividend Performers.

Diversification Opportunities for Main Buywrite and Dividend Performers

0.9

Correlation Coefficient

Main Buywrite  Dividend Performers

Almost no diversification

The 3 months correlation between Main and Dividend is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Main Buywrite ETF and Dividend Performers ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dividend Performers ETF and Main Buywrite 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 Main Buywrite ETF are associated (or correlated) with Dividend Performers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dividend Performers ETF has no effect on the direction of Main Buywrite i.e., Main Buywrite and Dividend Performers go up and down completely randomly.

Pair Corralation between Main Buywrite and Dividend Performers

Given the investment horizon of 90 days Main Buywrite ETF is expected to under-perform the Dividend Performers. But the etf apears to be less risky and, when comparing its historical volatility, Main Buywrite ETF is 3.11 times less risky than Dividend Performers. The etf trades about -0.03 of its potential returns per unit of risk. The Dividend Performers ETF is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,927  in Dividend Performers ETF on December 28, 2024 and sell it today you would earn a total of  22.00  from holding Dividend Performers ETF or generate 1.14% return on investment over 90 days.

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

Main Buywrite ETF  vs.  Dividend Performers ETF

Main Buywrite ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days Main Buywrite ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Main Buywrite is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Dividend Performers ETF

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dividend Performers ETF are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Dividend Performers is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Main Buywrite and Dividend Performers

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

The idea behind Main Buywrite ETF and Dividend Performers ETF 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.