Correlation Between Global Dividend and First Asset

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

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

Diversification Opportunities for Global Dividend and First Asset

0.7

Correlation Coefficient

Global Dividend  First Asset

Poor diversification

The 3 months correlation between Global and First is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Global Dividend Growth and First Asset Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Asset Tech and Global 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 Global Dividend Growth are associated (or correlated) with First Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Asset Tech has no effect on the direction of Global Dividend i.e., Global Dividend and First Asset go up and down completely randomly.

Pair Corralation between Global Dividend and First Asset

Assuming the 90 days trading horizon Global Dividend Growth is expected to generate 0.96 times more return on investment than First Asset. However, Global Dividend Growth is 1.04 times less risky than First Asset. It trades about -0.07 of its potential returns per unit of risk. First Asset Tech is currently generating about -0.1 per unit of risk. If you would invest  1,083  in Global Dividend Growth on December 30, 2024 and sell it today you would lose (82.00) from holding Global Dividend Growth or give up 7.57% of portfolio value over 90 days.

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

Global Dividend Growth  vs.  First Asset Tech

Global Dividend Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Dividend Growth has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

First Asset Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Asset Tech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with Global Dividend and First Asset

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

The idea behind Global Dividend Growth and First Asset Tech 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.