Correlation Between ETF Series and SmartETFs Dividend

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

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

Diversification Opportunities for ETF Series and SmartETFs Dividend

0.81

Correlation Coefficient

ETF Series  SmartETFs Dividend

Very poor diversification

The 3 months correlation between ETF and SmartETFs is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding ETF Series Solutions and SmartETFs Dividend Builder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartETFs Dividend and ETF Series 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 ETF Series Solutions are associated (or correlated) with SmartETFs Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartETFs Dividend has no effect on the direction of ETF Series i.e., ETF Series and SmartETFs Dividend go up and down completely randomly.

Pair Corralation between ETF Series and SmartETFs Dividend

Given the investment horizon of 90 days ETF Series is expected to generate 2.03 times less return on investment than SmartETFs Dividend. In addition to that, ETF Series is 1.4 times more volatile than SmartETFs Dividend Builder. It trades about 0.03 of its total potential returns per unit of risk. SmartETFs Dividend Builder is currently generating about 0.09 per unit of volatility. If you would invest  2,216  in SmartETFs Dividend Builder on October 10, 2024 and sell it today you would earn a total of  625.00  from holding SmartETFs Dividend Builder or generate 28.2% return on investment over 90 days.

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

ETF Series Solutions  vs.  SmartETFs Dividend Builder

ETF Series Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ETF Series Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

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.

Pair Trading with ETF Series and SmartETFs Dividend

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

The idea behind ETF Series Solutions and SmartETFs Dividend Builder 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.