Correlation Between FT Vest and Saba Capital

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

Diversification Opportunities for FT Vest and Saba Capital

0.62

Correlation Coefficient

FT Vest  Saba Capital

Poor diversification

The 3 months correlation between DHDG and Saba is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding FT Vest Equity and Saba Capital Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saba Capital Income 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 Saba Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saba Capital Income has no effect on the direction of FT Vest i.e., FT Vest and Saba Capital go up and down completely randomly.

Pair Corralation between FT Vest and Saba Capital

Given the investment horizon of 90 days FT Vest Equity is expected to under-perform the Saba Capital. But the etf apears to be less risky and, when comparing its historical volatility, FT Vest Equity is 2.34 times less risky than Saba Capital. The etf trades about -0.01 of its potential returns per unit of risk. The Saba Capital Income is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  863.00  in Saba Capital Income on September 23, 2024 and sell it today you would earn a total of  26.00  from holding Saba Capital Income or generate 3.01% return on investment over 90 days.

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

FT Vest Equity  vs.  Saba Capital Income

FT Vest Equity

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FT Vest Equity are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. 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.

Saba Capital Income

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Saba Capital Income are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, Saba Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with FT Vest and Saba Capital

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

The idea behind FT Vest Equity and Saba Capital Income 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.