Correlation Between SmartETFs Dividend and FT Vest

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

Diversification Opportunities for SmartETFs Dividend and FT Vest

-0.35

Correlation Coefficient

SmartETFs Dividend  FT Vest

Very good diversification

The 3 months correlation between SmartETFs and FDND is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding SmartETFs Dividend Builder and FT Vest Dow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Vest Dow 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 FT Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Vest Dow has no effect on the direction of SmartETFs Dividend i.e., SmartETFs Dividend and FT Vest go up and down completely randomly.

Pair Corralation between SmartETFs Dividend and FT Vest

Given the investment horizon of 90 days SmartETFs Dividend Builder is expected to under-perform the FT Vest. But the etf apears to be less risky and, when comparing its historical volatility, SmartETFs Dividend Builder is 1.85 times less risky than FT Vest. The etf trades about -0.1 of its potential returns per unit of risk. The FT Vest Dow is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,994  in FT Vest Dow on October 10, 2024 and sell it today you would earn a total of  257.00  from holding FT Vest Dow or generate 12.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

SmartETFs Dividend Builder  vs.  FT Vest Dow

SmartETFs Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SmartETFs Dividend Builder has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

FT Vest Dow

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FT Vest Dow are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, FT Vest exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SmartETFs Dividend and FT Vest

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

The idea behind SmartETFs Dividend Builder and FT Vest Dow 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.