Correlation Between ETRACS Monthly and DSJA

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

By analyzing existing cross correlation between ETRACS Monthly Pay and DSJA, you can compare the effects of market volatilities on ETRACS Monthly and DSJA 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 ETRACS Monthly with a short position of DSJA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS Monthly and DSJA.

Diversification Opportunities for ETRACS Monthly and DSJA

0.24

Correlation Coefficient

ETRACS Monthly  DSJA

Modest diversification

The 3 months correlation between ETRACS and DSJA is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS Monthly Pay and DSJA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DSJA and ETRACS Monthly 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 ETRACS Monthly Pay are associated (or correlated) with DSJA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DSJA has no effect on the direction of ETRACS Monthly i.e., ETRACS Monthly and DSJA go up and down completely randomly.

Pair Corralation between ETRACS Monthly and DSJA

Given the investment horizon of 90 days ETRACS Monthly is expected to generate 2.3 times less return on investment than DSJA. In addition to that, ETRACS Monthly is 1.58 times more volatile than DSJA. It trades about 0.06 of its total potential returns per unit of risk. DSJA is currently generating about 0.21 per unit of volatility. If you would invest  2,388  in DSJA on September 26, 2024 and sell it today you would earn a total of  477.00  from holding DSJA or generate 19.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	27.77%
Values	Daily Returns

ETRACS Monthly Pay  vs.  DSJA

ETRACS Monthly Pay

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ETRACS Monthly Pay has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, ETRACS Monthly is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

DSJA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ETRACS Monthly and DSJA

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

The idea behind ETRACS Monthly Pay and DSJA 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..