Correlation Between Financial and Global Dividend

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

By analyzing existing cross correlation between Financial 15 Split and Global Dividend Growth, you can compare the effects of market volatilities on Financial and Global 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 Financial with a short position of Global Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial and Global Dividend.

Diversification Opportunities for Financial and Global Dividend

0.94

Correlation Coefficient

Financial  Global Dividend

Almost no diversification

The 3 months correlation between Financial and Global is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Financial 15 Split and Global Dividend Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Dividend Growth and Financial 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 Financial 15 Split are associated (or correlated) with Global Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Dividend Growth has no effect on the direction of Financial i.e., Financial and Global Dividend go up and down completely randomly.

Pair Corralation between Financial and Global Dividend

Assuming the 90 days trading horizon Financial 15 Split is expected to under-perform the Global Dividend. In addition to that, Financial is 2.35 times more volatile than Global Dividend Growth. It trades about -0.29 of its total potential returns per unit of risk. Global Dividend Growth is currently generating about -0.31 per unit of volatility. If you would invest  1,199  in Global Dividend Growth on September 24, 2024 and sell it today you would lose (51.00) from holding Global Dividend Growth or give up 4.25% of portfolio value over 90 days.

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

Financial 15 Split  vs.  Global Dividend Growth

Financial 15 Split

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Financial 15 Split are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Global Dividend Growth

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Dividend Growth are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Global Dividend may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Financial and Global Dividend

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

The idea behind Financial 15 Split and Global Dividend Growth 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.