Correlation Between FT Cboe and Starboard Investment

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

Diversification Opportunities for FT Cboe and Starboard Investment

0.76

Correlation Coefficient

FT Cboe  Starboard Investment

Poor diversification

The 3 months correlation between DFEB and Starboard is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding FT Cboe Vest and Starboard Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starboard Investment 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 Starboard Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starboard Investment has no effect on the direction of FT Cboe i.e., FT Cboe and Starboard Investment go up and down completely randomly.

Pair Corralation between FT Cboe and Starboard Investment

Given the investment horizon of 90 days FT Cboe is expected to generate 2.19 times less return on investment than Starboard Investment. But when comparing it to its historical volatility, FT Cboe Vest is 3.19 times less risky than Starboard Investment. It trades about 0.27 of its potential returns per unit of risk. Starboard Investment Trust is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,559  in Starboard Investment Trust on September 12, 2024 and sell it today you would earn a total of  143.44  from holding Starboard Investment Trust or generate 9.2% return on investment over 90 days.

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

FT Cboe Vest  vs.  Starboard Investment Trust

FT Cboe Vest

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FT Cboe Vest are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, FT Cboe is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Starboard Investment

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Starboard Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Starboard Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with FT Cboe and Starboard Investment

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

The idea behind FT Cboe Vest and Starboard Investment Trust 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.