Correlation Between SmartETFs Dividend and SmartETFs Asia

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

By analyzing existing cross correlation between SmartETFs Dividend Builder and SmartETFs Asia Pacific, you can compare the effects of market volatilities on SmartETFs Dividend and SmartETFs Asia 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 SmartETFs Dividend with a short position of SmartETFs Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of SmartETFs Dividend and SmartETFs Asia.

Diversification Opportunities for SmartETFs Dividend and SmartETFs Asia

0.69

Correlation Coefficient

SmartETFs Dividend  SmartETFs Asia

Poor diversification

The 3 months correlation between SmartETFs and SmartETFs is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding SmartETFs Dividend Builder and SmartETFs Asia Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartETFs Asia Pacific and SmartETFs Dividend 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 SmartETFs Dividend Builder are associated (or correlated) with SmartETFs Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartETFs Asia Pacific has no effect on the direction of SmartETFs Dividend i.e., SmartETFs Dividend and SmartETFs Asia go up and down completely randomly.

Pair Corralation between SmartETFs Dividend and SmartETFs Asia

Given the investment horizon of 90 days SmartETFs Dividend is expected to generate 2.44 times less return on investment than SmartETFs Asia. But when comparing it to its historical volatility, SmartETFs Dividend Builder is 2.42 times less risky than SmartETFs Asia. It trades about 0.05 of its potential returns per unit of risk. SmartETFs Asia Pacific is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,505  in SmartETFs Asia Pacific on September 5, 2024 and sell it today you would earn a total of  66.00  from holding SmartETFs Asia Pacific or generate 4.39% return on investment over 90 days.

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

SmartETFs Dividend Builder  vs.  SmartETFs Asia Pacific

SmartETFs Dividend

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SmartETFs Dividend Builder are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SmartETFs Dividend is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

SmartETFs Asia Pacific

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SmartETFs Asia Pacific are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable forward indicators, SmartETFs Asia is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with SmartETFs Dividend and SmartETFs Asia

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

The idea behind SmartETFs Dividend Builder and SmartETFs Asia Pacific 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.