Correlation Between FT Cboe and Starboard Investment

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

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

Diversification Opportunities for FT Cboe and Starboard Investment

0.84

Correlation Coefficient

FT Cboe  Starboard Investment

Very poor diversification

The 3 months correlation between DNOV and Starboard is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding FT Cboe Vest and Starboard Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starboard Investment and FT Cboe 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 Cboe Vest are associated (or correlated) with Starboard Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starboard Investment has no effect on the direction of FT Cboe i.e., FT Cboe and Starboard Investment go up and down completely randomly.

Pair Corralation between FT Cboe and Starboard Investment

Given the investment horizon of 90 days FT Cboe Vest is expected to generate 0.23 times more return on investment than Starboard Investment. However, FT Cboe Vest is 4.33 times less risky than Starboard Investment. It trades about 0.16 of its potential returns per unit of risk. Starboard Investment Trust is currently generating about 0.03 per unit of risk. If you would invest  4,131  in FT Cboe Vest on September 15, 2024 and sell it today you would earn a total of  211.00  from holding FT Cboe Vest or generate 5.11% return on investment over 90 days.

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

FT Cboe Vest  vs.  Starboard Investment Trust

FT Cboe Vest

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in FT Cboe Vest are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, FT Cboe is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Starboard Investment

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Starboard Investment Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Starboard Investment is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FT Cboe and Starboard Investment

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

The idea behind FT Cboe Vest and Starboard Investment 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.