Correlation Between FT Vest and Capitol Series

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

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

Diversification Opportunities for FT Vest and Capitol Series

0.83

Correlation Coefficient

FT Vest  Capitol Series

Very poor diversification

The 3 months correlation between DHDG and Capitol is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding FT Vest Equity and Capitol Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Series Trust and FT Vest 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 Vest Equity are associated (or correlated) with Capitol Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Series Trust has no effect on the direction of FT Vest i.e., FT Vest and Capitol Series go up and down completely randomly.

Pair Corralation between FT Vest and Capitol Series

Given the investment horizon of 90 days FT Vest Equity is expected to generate 0.37 times more return on investment than Capitol Series. However, FT Vest Equity is 2.71 times less risky than Capitol Series. It trades about -0.08 of its potential returns per unit of risk. Capitol Series Trust is currently generating about -0.09 per unit of risk. If you would invest  3,114  in FT Vest Equity on December 26, 2024 and sell it today you would lose (83.00) from holding FT Vest Equity or give up 2.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

FT Vest Equity  vs.  Capitol Series Trust

FT Vest Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days FT Vest Equity has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, FT Vest is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Capitol Series Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capitol Series Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Etf's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with FT Vest and Capitol Series

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

The idea behind FT Vest Equity and Capitol Series 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.