Correlation Between FT Vest and Stance Sustainable

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

Diversification Opportunities for FT Vest and Stance Sustainable

0.47

Correlation Coefficient

FT Vest  Stance Sustainable

Very weak diversification

The 3 months correlation between DHDG and Stance is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding FT Vest Equity and Stance Sustainable Beta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stance Sustainable Beta 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 Stance Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stance Sustainable Beta has no effect on the direction of FT Vest i.e., FT Vest and Stance Sustainable go up and down completely randomly.

Pair Corralation between FT Vest and Stance Sustainable

Given the investment horizon of 90 days FT Vest is expected to generate 1.16 times less return on investment than Stance Sustainable. But when comparing it to its historical volatility, FT Vest Equity is 2.89 times less risky than Stance Sustainable. It trades about 0.46 of its potential returns per unit of risk. Stance Sustainable Beta is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  2,483  in Stance Sustainable Beta on September 16, 2024 and sell it today you would earn a total of  58.00  from holding Stance Sustainable Beta or generate 2.34% return on investment over 90 days.

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

FT Vest Equity  vs.  Stance Sustainable Beta

FT Vest Equity

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FT Vest Equity are ranked lower than 13 (%) 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.

Stance Sustainable Beta

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Stance Sustainable Beta are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Stance Sustainable may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with FT Vest and Stance Sustainable

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

The idea behind FT Vest Equity and Stance Sustainable Beta 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.